2020 (5) TMI 488

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....2. The sole issue challenged by the Department is deleting the disallowance of Rs. 2,11,03,333/- by the Ld. CIT (A) which had been disallowed by the Assessing Officer (AO) under the head "Maintenance Expenses". The Cross Objection has also been preferred by the assessee. 2.0 The brief facts of the case are that the assessee company is a company engaged in the business of Alcoholic Beverages, Malted Milk Food, Dairy products and Glass Containers etc. The Income Tax Return was filed declaring the total income amounting to Rs. 3,66,95,928/- under normal provisions of the Income Tax Act, 1961 (hereinafter called 'the Act') and Rs. 35,52,52,312/- u/s 115JB of the Act. In the return of income, the assessee had shown income from house property ....

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....hould be regarded as part of the composite rent for computing the income taxable under the head 'income from house property' and no further deduction towards repairs and maintenance expenses actually incurred should be allowed thereafter because the statutory deduction @ 30% u/s 24 (a) of the Act has already been allowed on the gross rental income. It was submitted that there was no basis for the Ld. CIT (A) to have allowed a further deduction of Rs. 2,11,03,333/- towards maintenance expenses. It was argued that the ambit of the term 'rent' is very wide under the provisions of the Act and it would include any amount which is paid in consideration of the property being let out. It was submitted that the maintenance charges form part of the r....

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.... property. On the other hand we also note that, subsequently, in Assessment Year 2016-17, although the assessee had again claimed the maintenance income as part of rental income and had also claimed deduction of maintenance expenditure as part of the gross rent, the Assessing Officer has treated the maintenance income and expenditure as being chargeable to tax under income from the other sources. This is in line with the judgment of the Hon'ble High Court of Karnataka in the case of CIT vs. Shantikumar Narayana Hotel Pvt. Ltd. reported in 201 ITR 138 (Kar.) wherein it was held that even if there is a composite agreement in respect of building and amenities and if the services provided are separable then the income derived from the amenities....