TaxTMI 
TaxTMI 
2025 (6) TMI 636
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....d 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. - TOTAL TAX EFFECT 14,80,788 3. Brief facts of the case are that the assessee filed the return of income for the as....
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....d & 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 28,07,780/- Less 30% for Repairs & Maintenance 8,42,334/- Net Annual Value 19,65,446/- 3.4 Further, with regard to let out property i.e. situated at Kanaka's Pride, Bull Temple Road to State B....
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....d 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 the order of ld. CIT(A)/NFAC, the assessee has filed present appeal before this Tribunal. The assessee has also filed a written submission comprising 13 pages, compilation comprising 110 pages and paper book comprising 164 pages in support of his case. 7. Before us, the ld. A.R. of the assessee vehemently s....
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....edings 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 charging section, we find that the annual value of the property of which the assessee is the owner shall be chargeable to income tax under the head "Income from house property". 9.2 Now more specifically, section 23 of the Act enumerate how the annual value is to be determined. The relevant section 23(1) of the Act is reproduced belo....
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....essee 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 assessee is not only receiving the amount of rent from the tenant for the lease out of the property but was also receiving separately the amount in consideration of the services rendered to its tenant. The assessee in the present case is under the lease agreement received the maintenance charges over and above the rent. As per Annexure A of the lease deed dated 23.9.2010 placed at page 94-95 of the p....
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....nce 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 / horticultural plants (both inside & outside premises, including daily watering), stair case, terrace, and painting of the premises once in five years. All the existing furniture etc. to be polished before handing over possession to the Bank and thereafter once in five years. Maintenance, security -round the clock by engaging security and other personnel as under: Day time: Minimum security guards: 6 Nos. Night time: Minimum security guards: 3 Nos Lift Opera....
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....ich 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 assessable u/s 22 of the Act as "income from house property" and the other receipts in respect of services rendered to the tenants was liable to assessed u/s 28 of the Act as business profit. In our view, the ratio laid down by the Hon'ble Gujarat High Court in the case of Sarabhai (P) Ltd. (supra) covers the instant situation. Undisputedly the maintenance charges are being received by the assessee in return for providing specific services like external house-keeping, round the clock....
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....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 to such vacancy the actual rent received or receivable by the owner in respect thereof is less than the sum referred to in clause (a), the amount so received or receivable" 9.1 The word receivable refers to the payment not being realised. The use of word "receivable" in section 23(1)(c) of the Act, indicates that there should be, not mere possibility of receiving the rent, but rent can become payable in all the probability, as the property is available for being given on rent. Then it can be con....