AI Drafter 
TaxTMI 
TaxTMI 
2025 (6) TMI 636
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....beyond the scope of the limited scrutiny initiated. 14,80,788 3. The CIT(A) erred in confirming the addition of annual letting value of Rs. 3,76,327 with respect to the Purvankara flat. 1,33,728 4. The CIT(A) erred in holding that the maintenance charges of Rs. 59,23,126 received from the tenant State Bank of India was assessable under the head income from house property. 13,47,060 5. The CIT(A) erred in holding that section 44AD does not apply to the maintenance charges received from State Bank of India. 13,47,060 6. Without prejudice, the Appellant's claim seeking deduction of all expenses against the maintenance charges received from State Bank of India ought to have been allowed. 13,47,060 7. The CIT(A) ought to have quashed the assessment order on the ground that the AO did not provide an opportunity for hearing. 14,80,788 8. The Appellant craves leave to add to, amend, alter, vary and/ or withdraw any or all of these grounds of appeal. For these and other grounds that may be adduced at the time of the hearing, the impugned order of the CIT(A) may be set aside and the appeal allowed in the interests of justice. - ....
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....income has been offered to tax. Further, the residential house which is located at J.P. Nagar was treated as self-occupied property. As regards OMVR Layout is concerned, it is a vacant plot of land & hence, the provisions of section 23 of the Act is not applicable. As regards property at Elita Pramonate, it is a residential apartment and accordingly, the provisions of deemed let out as per section 23 of the Act shall be applicable. Accordingly, the AO taking into account of the details of immovable properties furnished by the assessee, considered the following properties as deemed to be let out :- 1 Keppel Purvankara Developers 63,24,825 2 Property @ J P Nagar 2,67,07,891 Total 3,30,32,716 3.3 In absence of any submissions made by the assessee in respect of fair rental value/municipal rental value of the property for determining the annual value of the house property as per the provisions of section 23(1)(a) of the Act, the notional value of Rs. 28,07,780/- (8.5% of Rs. 3,30,32,716/-) is adopted as annual value for the purpose of computing deemed income from house property and accordingly computed the income as below: ALV as discussed above ....
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.... Income from Other Sources(as per return) 9,74,634 Gross Total Income 3,05,05,085 Less Deduction U/C VI A 1,68,750 Assessed Income 3,03,36,335 4. Aggrieved by the assessment completed u/s 143(3) of the Act dated 28.2.2021, the assessee had preferred an appeal before the ld. CIT(A)/NFAC. 5. With regard to the property at J.P. Nagar declared at Rs. 2,67,07,891/-, the assessee claimed that the property shown in the site on which the building is constructed is a part of the self- occupied property only. Further the assessee had also submitted the copy of purchase deed before the ld. CIT(A)/NFAC and accordingly, the ld. CIT(A)/NFAC found merit in the submission made by the assessee and directed the AO to consider the said property as self-occupied. 5.1 With regard to maintenance charges, the ld. CIT(A)/NFAC held that the income received by way of entering into lease deed does not fall under the purview of business income and the provisions of section 44AD of the Act cannot be applied & uphold the view taken by the AO. 5.2 Accordingly, the ld. CIT(A)/NFAC partly allowed the appeal of the assessee. 6. Aggrieved by....
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....ent are taxable under the head "income from house property" and not under the head "Profits & gains of business or profession". We are of the opinion that as rightly contended by the AO that the additions made on the issues emerged only after filing of the details of the assets during the course of assessment proceedings which the assessee ought to have furnished in the return of income. Therefore we are unable to hold that the AO passed the assessment order beyond the scope of the limited scrutiny initiated and accordingly we dismiss this ground of the assessee. 9.1 Before proceeding further, it is apposite to mention here the provision of section 22 of the Act which is a chargeable section of "income from house property" "22. Income from house property. - The annual value of property consisting of any buildings or lands appurtenant thereto of which the assessee is the owner, other than such portions of such property as he may occupy for the purposes of any business or profession carried on by him the profits of which are chargeable to income-tax, shall be chargeable to income-tax under the head "Income from house property". On plain reading of the above ch....
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....ed by the word "to". What the provision means that you have to estimate the sum which the property would fetch if let from year to year and that sum would represent the annual value. The words "to let" do not denote even in a stretch of imagination the maintenance charges separately charged for the extra services to be rendered by the landlord to the tenant. 9.4 In the present case, the assessee had let out the property namely Kanaka's Pride, Bull Temple Road, Basavanagudi, Bangalore to State Bank of India. As can be seen from the lease deeds dated 23.9.2010 and 13.1.2011 entered into with the tenant "SBI" for letting out the premises admeasuring 34,260 sq.ft. and 11,860 sq.ft. respectively and the Annx-A thereto, the premises have been let out for a term of 10 years. The rent for the first 5 years being Rs. 51/- per sq.ft. and maintenance charges is Rs. 7/- per sq.ft. Further, as per the lease deed, the rent shall increase by 25% of the existing rent at the end of 5 years period for the remaining 5 years period during the term of lease. (Both lease dated 23.9.2010 as well as dated 13.1.2011 are placed in the paper book page 83 to 111). It is undisputed fact that the assesse....
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....ludes for all amenities provided like interiors, furniture, fixtures, parking, canteen on terrace floor, fitness room, and basement area, furniture, fittings, etc. No separate rent is payable for Canteen, Basement area. Fitness room, Canteen, 3/4" parking in setback and basement areas. 21 Maintenance charges per sq.ft carpet area Rs. 7/- per Sq.ft for 34,260.00 sq ft carpet area to be payable by the lessee to the lessors towards maintenance. Maintenance includes External House Keeping, round the clock Security, maintenance. Operation & upkeep of Lifts. UPS, electrical fittings, data cable / network, bore well, pump sets, Water supply facility, smoke detectors. Transformers. DG sets, split ACs, Central AC, Fire fighting systems, Public Address Systems / music system, CCTV, including AMC of all the above. Central AC to be reconditioned, including replacement of necessary parts / spares and other components to ensure proper cooling effect on all floors. Maintenance, repair/replacement of furniture & fixtures, security round the clock, Maintenance, repairs/replacement of all the interiors, replacement of tubes, bulbs, all minor & major repairs, Garden maintenance, flower....
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....haracter. 9.6 We have to give importance to the substance over the form principle. Merely because the assessee had not executed a separate agreement for maintenance charges, it cannot be said that the same were income from house property chargeable u/s 22 of the Act. In this connection, it would be relevant here to refer to the judgement of Hon'ble Gujarat High Court in the case of Commissioner of Income Tax Vs. Sarabhai (P.) Ltd. reported in (2003) 263 ITR 197 (Gujarat), which lays down that if the owner of a property carries on upon the property some activities which results in profits & gains arising, not from the ownership but from the use thereof, such profits & gains would be chargeable to tax as business income and not income under the head "income from house property". In fact in the case before the Hon'ble Gujarat High Court, the assessee was the owner of the property, which was let out to the tenants. Apart from letting out, assessee was also rendering certain services by providing various amenities for which amount was being separately earned. The Hon'ble High Court held that amount received from the tenants as "rent" for letting of the property was assess....
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....m house property is an artificially defined income and the liability arises from the fact that the assessee is the owner of the property. It is undisputed fact that the premise owned by the assessee was although vacant but was available for let out as submitted by the assessee. The main contention of the AR of the assessee is that when there are genuine efforts to let out the property but same cannot be let out then no notional rent can be estimated. We are of the considered opinion that the assessee's failure in being able to find a tenant leading to vacancy of the premises for the entire year cannot prevent AO in applying the provisions of section 23(1)(C) of the Act especially when there is no legal disability or physical disability in creating a tenancy due to which the property is left vacant. The coordinate bench of the Tribunal in the case of Kamal Kumar v. ACIT reported in [2022] 195 ITD 572 has held as under- "9. In this context, the view is confirmed by looking back to section 23(1)(c) of the Act, which provides that: "(c) where the property or any part of the property is let and was vacant during the whole or any part of the previous year and owing ....