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2022 (10) TMI 679
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....he assessee under the head "income from other sources". For this, the assessee has raised various grounds which are argumentative nature and exhausted and hence, need not be reproduced. 3. The brief facts of the case are that the assessee owns two floors i.e., 8th & 9th floors of the commercial property known as Menon Eternity at No. 165, St. Mary's Road, Alwarpet, Chennai. The assessee admitted the rent received pertaining to the ownership of these two floors under the head "income from house property" on the basis of annual letting value of the space. The assessee also declared maintenance charges from these premises as "income from other sources" and the details are given in assessment order and the same is being reproduced for the sake of convenience as under: S. No. Name of the premised rent out Rent Maintenance charges 1. 8th floor Menon Eternity, 165 St. Marry's Road, Alwarpet, Chennai 18 12898466 1736952 1. 8th floor Menon Eternity, 165 St. Marry's Road, Alwarpet, Chennai 18 16585600 1736952 1. Flat H 3rd floor, spring leaf, Apartment, 6/8 brunton Road, 1^st Cross, Bangalore (-) 4064715 -- 1. 10th floor Menon Eter....
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....el for the assessee Mr. R. Vijayaraghavan, Advocate stated the fact that the assessee has actually let out these two floors i.e., 8th & 9th floors of the building Menon Eternity and admitted the rental income and offered for taxation under the head "income from house property". The assessee also paid expenses on maintenance charges and claimed the maintenance charges as "income from other sources" i.e., the surplus arising out of the same. The Ld. counsel for the assessee explained that the property has got parking lots for parking vehicles belonging to the tenants and their clients in the basement, ground and first floor. The building has 400KV power supply, pest control services for common areas, security services both physical security and electronic surveillance system, central AC plant, Diesel Generator, Motors, Fire hydrants, Fire Alarm system, Extinguishers, Transformers, External Glass ACP cleaning services, water management, solid waste management, Landscaping services. The building has got lifts, numbering 5, which are used by all the tenants. The building requires constant repairs and painting and maintenance for seeping it in good condition and proper use. The ld. couns....
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....nt shall have a permanent character, and shot be altered without the consent of all apartment owners. The percentage of the undivided interest in such common areas and facilities and the limited common areas and facilities shall not be separated from the apartment to which it appertains, and shall be deemed to be conveyed or encumbered with the apartment whether or not such interest is expressly mentioned in the conveyance or other instrument." 8. Subsequently, he also referred s. 19, 20 and 21 of this Act, which reads as under: "19. Common profits and expenses- (1) The common profits shall be distributed among, and the common expenses shall be charged to, the apartment owners according to the percentage of the undivided interest of the apartment owners in the common areas and facilities specified in the Deed of Apartment. (2) Every apartment owner shall, notwithstanding his waiver of the use or enjoyment of any of the common areas and facilities and the limited common areas and facilities or his abandonment of his apartment, be liable to be charged to the common expenses under sub-section (1). (3) Where the apartment owner is not in occupatio....
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....nsation payable by the lessee or the licensee. Hence, the maintenance charges are nothing but rent and should be assessed under the head "income from house property". 10. We have heard the rival contentions and gone through the facts and circumstances of the case. The facts are undisputed. The assessee is owner of two floors i.e., 8th & 9th floors in the property of Menon Eternity, Alwarpet, Chennai. The assessee admitted the rent receipt pertaining to the ownership of these two floors under the head "income from house property". The disputed point is the assessment of maintenance charges whether the same are to be assessed as "income from house property" or these are "income from other sources". We noted that this property has got parking lots for parking vehicles belonging to the tenants and their clients. The building has other facilities like 400KV power supply, pest control services for common areas, security services, central AC plant, Diesel Generators, Fire Hydrants, buildings lifts etc. We also noted that the building requires constant repairs, paintings and maintenance. As informed by Ld. Counsel for the assessee that earlier this building was maintained by the builder....
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....s along-with the rent, rent or charges for different services provided in the building, then if the composite rent is separable then the portion of rent for building will be taxed as "income from house property" and the rent for other things under "Income from other sources". In this case, the rent is separable from the maintenance charges, the maintenance charges is fixed at Rs. 7/sq. ft. What s. 22 attempts to assess is the annual value of the property consisting of any building or land appurtenant thereto, of which the assessee is the owner. The rent being charged by the assessee is the annual letting value. The expenditure on the items, i.e., the maintenance of 400KV power supply, nest control services for common areas, security services both physical security and electronic surveillance system, central AC plant, Diesel Generator, Motors, Fire hydrants, Fire Alarm system, Extinguishers, Transformers, External Glass ACP cleaning services, water management, solid waste management, Landscaping services, lift, etc., as well as that on the electricity consumed in respect of any common area is not attributable directly to the house property as such, but to its enjoyment by the tenant....
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....Assistant Commissioner as well as the Tribunal for coming to the conclusion that the services rendered by the assessee was an activity independent of letting out the premises to the tenants. According to him the primary activity of the assessee was to let out the premises and the services rendered were merely incidental. In support of his contention he relied on the ratio of the decision of this court in Commissioner of Income-tax v. National Storage Private Ltd. [1967] 66 ITR 596 (SC): TC13R.914. He alternatively contended that the income said to have been realised as a result of rendering the services by the assessee should have been brought to tax under section 12(4). For that contention he relied on the decision of this court in Sultan Brothers Private Ltd. v. Commissioner of Income-tax [1964] 51 ITR 353 (SC) : TC13R. 796. The High Court after reassessing the evidence on record has also taken the view that there was only one source of income and that source was of letting out the premises to the tenants. Mr. Manchanda contended, and the High Court has accepted that contention, that the authorities under the Act have not properly construed the lease deeds nor have they properly ....
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....perty' on the ground that certain portion of the amount is related to services provided as per the agreements which are independent ones. The rental receipts shows only the consolidated amount, instead of apportioning it into different heads. The revenue should have apportioned the amounts and such apportioned amounts should be assessed under the head 'Income from business' or 'Income from other sources'. In the present cases, there are service-cum-lease agreements entered into on 1-4-1997, by the assessees with their respective occupants. For convenient purpose, we reproduce below the clauses contained in one of the tax cases, namely TC No. 75 of 2004: 1. The consolidated service charges payable shall be Rs. 1,200 (rupees one thousand and two hundred only) per month or such sum as agreed upon mutually by both the parties. 2. The advance amount shall be Rs. 30,000 (Rupees thirty thousand only) which shall be interest free. 3. The occupant/service receiver shall also be entitled to sub-lease this facility with the prior permission of landlord/service provider. 4. The service-cum-lease agreement shall be valid for a maximum of 1....