TaxTMI 
TaxTMI 
2025 (9) TMI 440
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..... 2014-15) 2 specifically at cost of Rs 6,79,99,690/-instead of head "business income". Income from letting out property assessed, separately, under the head 'House Property'. 2. Ld. CIT(A) erred in upholding disallowance of expenses of Rs. 1,63,80,770/- including depreciation Rs 1,31,46,816/- claimed under the head "Business and Profession" as income being, held to be assessable under the head 'House Property' Appellant received' Common Maintenance charges' Rs 30,53,665/- and offered as 'business income'. 3. Ld. CIT(A) erred in upholding disallowance of Municipal taxes Rs. 56,85,570/- claimed against Rent received Rs 4,52,00,467/- although paid during the year for Current Year Rs. 13,31,107/- and Rs. 43,54,463/- paid on 15.04.2014. Appellant paid Municipal Tax R$4,08,985/- for A.Y.2013-14 on 25.07.2013. Appellant thus paid Rs. 17,40,092/- which warranted allowance in A.Y.2014-15. It is prayed that Rs. 43,54,463/- paid on 15.04.2014 be directed to be allowed in A.Y.2015-16. 4. Ld. CIT(A) erred in upholding disallowance of Rs. 1,09,39,229/- out of the interest claimed against "house property" income without appreciating the ....
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....imed the income received therefrom as "Income from House Property". Furthermore, the assessee entered into a separate agreement for the facility dated 01/03/2013 with M/S Aditya Birla Minacs Worldwide Ltd to provide functional infrastructure and other facilities at Unit nos. 801, 802, 901, 902, 1001, and 1002 in Symphony IT Park. The assessee declared income from this agreement of INR 1,21,48,483 along with the receipt of the Common Facility of INR 30,53,665 under the head "Income from Business". Accordingly, the assessee declared a total income of INR 1,52,02,148, against which various expenses amounting to INR 1,63,80,770 were claimed, resulting in a net loss of INR 11,78,620 under the head "Income from Business". During the assessment proceedings, the assessee was asked to show cause and explain why the receipts on account of the agreement for facilities should not be assessed as "Income from House Property". 5. After considering the submissions of the assessee, the Assessing Officer ("AO") vide order dated 30/12/2016 passed under section 143(3) of the Act held that the parties agreed to register the agreement for the facility and only an agreement in connection with immovabl....
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.... Ltd. Further, the assessee declared an amount of INR 1,21,48,483 as income under the head "Income from Business" for providing functional infrastructure and other facilities to M/S Aditya Birla Minacs Worldwide Ltd in the premises given on rent to M/S Aditya Birla Minacs Worldwide Ltd. However, the lower authorities disagreeing with the submissions of the assessee held that income earned from providing facilities to M/S Aditya Birla Minacs Worldwide Ltd is also in the nature of income from house property, as these facilities are inextricably connected to giving the premises on lease, as the premises on rent were taken with specified conditions by M/S Aditya Birla Minacs Worldwide Ltd. 8. From the perusal of the Leave and License Agreement dated 01/02/2013 entered into between the assessee and M/S Aditya Birla Minacs Worldwide Ltd, we find that Unit nos. 801, 802, 901, 902, 1001, and 1002 in Symphony IT Park were given on lease to M/S Aditya Birla Minacs Worldwide Ltd for a period of 60 months at a license fee of INR 21,33,480 per month plus applicable service tax, with clause for 15% escalation of license fee after 36 months. As per this agreement, the assessee agreed to delive....
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....ety Vedant Fire and Security systems Access control, CCTV, Fire Alarm System, Fire extinguishers. 5913557 Electrical Works Delcon Electrical Pvt Ltd LT panels: 6nos, UPS Output panel: 3no, PDU: 2nos, DBS:43nos, AC DBs:9nos, UPS power sockets at WS, Ceiling Raceways, Light Fixtures: 724nos 12850308 HVAC VK Building Solutions VRF: 162HP, DX M/s: 42TR 12012712 Data center Walls Pooja Constructions 1550 sqft 224750 Blinds Louver Blinds Roller Blinds: 590sqmt Blackout Blinds: 132sqmt 837581 Total 59617801 10. As per the assessee, under the head "Income from House Property", only income receivable from the use of land and building is assessable, and if any other facilities are provided, the income therefrom is taxable either under the head "Income from Business" or under the head "Income from Other Sources". In this regard, the assessee has placed reliance upon the provisions of the Act and various decisions of the Hon'ble Cou....
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....nextricably linked, claimed that the revenue from both the agreements is taxable under the head "Income from House Property". 14. From the combined perusal of the aforesaid agreements entered into between the assessee and M/S Aditya Birla Minacs Worldwide Ltd, we are of the considered view that providing facilities and letting out the premises are two separate transactions. It is further evident from the perusal of the Agreement for Facility that M/S Aditya Birla Minacs Worldwide Ltd was under no obligation to obtain the facilities from the assessee. The tenant could have placed his own facilities or hired facilities from a third party. In this regard, it is relevant to note the following facilities which were placed in the premises at the instance of the M/S Aditya Birla Minacs Worldwide Ltd, as noted on page 53 of the paper book: - Packages Vendor Description PO no. PO Invoice number Invoice amount Civil & Joinery 5 Cabin tables with Credenza NA UPS - 120KVA x 2 nos Socomac 2 nos of UPS with 58 Batteries 2908193 PAC V K Building Solution 13TR X 3 nos. &nb....
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....2 It cannot be disputed that the assessee was not only receiving the amount of rent from the tenants but was also receiving amount in consideration of the services rendered to its tenants. For the said purpose the assessee had maintained certain staff and had also invested amount in several assets like air-conditioners, air conditioning plants, telephones, water coolers, canteens, furniture and fixtures. The assessee had also recruited and maintained specialised persons so that proper services can be rendered to the tenants. 9.3 Looking to the above referred undisputed facts. We cannot deny that the assessee was in business of rendering such services to the tenants. 9.4 Looking to the facts of the case and the law laid down by the Supreme Court in the judgment referred to hereinabove, we are of the view that the Tribunal was in error while considering the income of the assessee as "income from other sources". The income was received by the assessee under two different heads. The assessee was getting rent from the tenants as the buildings had been let to the tenants. In addition to letting the buildings or parts thereof, the assessee was also rendering numerous ser....
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.... head "Income from Business". Accordingly, we direct the AO to compute the income of the assessee by treating the income earned from the Agreement for Facility as "Income from Business". 18. Insofar as the receipt of INR 30,53,665 received by the assessee from providing Common Area Maintenance ("CAM") Services, applying the aforesaid analogy, we are of the considered view that the same is taxable under the head "Income from Business". We find that the coordinate bench of the Tribunal in DCIT vs. Arham IT Infrastructure (P.) Ltd., reported in [2021] 130 taxmann.com 172 (Delhi - Trib.), held that maintenance charges received by the assessee, owner of a property, from tenants for undertaking maintenance of common areas of the property were to be assessed as income from business and profession. The relevant findings of the coordinate bench, in the aforesaid decision, are as follows: - "13. We have given thoughtful consideration to the orders of the authorities below and have also considered the judicial decisions relied upon by both the parties. It is not in dispute that the appellant had agreement with the tenants and in such agreement, there was specific clause in respect....
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.... Revenue are accordingly dismissed." 19. Therefore, respectfully following the aforesaid decision, we direct the AO to compute the income of the assessee by treating the receipts from CAM Services as "Income from Business". Accordingly, grounds no.1 and 2 raised in assessee's appeal are allowed. 20. The issue arising in ground no.3, raised in assessee's appeal, pertains to the disallowance of municipal taxes claimed against the rental income received by the assessee. 21. The brief facts of the case pertaining to this issue, as emanating from the record, are: During the year under consideration, against the rental income declared by the assessee, the assessee claimed a deduction of INR 56,85,570 on account of property tax. During the assessment proceedings, upon perusal of the balance sheet, it was observed that the assessee had declared an amount of INR 45,57,132 as property tax payable. Accordingly, the assessee was asked to show cause why the claim of deduction of INR 56,85,570 made against the income from House Property should not be denied in light of the provisions of section 23 of the Act. In response, the assessee submitted that out of INR 45,57,132, being property ....
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....financial year 2014-15. In the present case, there is no dispute regarding the fact that, as per the provisions of the proviso to section 23 of the Act, while computing the annual value of the property, the taxes which are actually paid during the year are deductible. Therefore, we restore this issue to the file of the AO with a direction to allow the deduction as per the proviso to section 23 of the Act in respect of the taxes actually paid by the assessee during the year under consideration, after necessary verification of the details as may be submitted by the assessee. With the above directions, the impugned order on this issue is set aside, and ground no.3 raised in assessee's appeal is allowed for statistical purposes. 25. The issue arising in ground no.4, raised in assessee's appeal, pertains to the disallowance of interest claimed by the assessee against the "Income from House Property". 26. The brief facts of the case pertaining to this issue are that during the assessment proceedings, the assessee was asked to show cause as to why the claim of interest of INR 2,86,21,439 under the head "Income from House Property" should not be disallowed. In response, the assessee ....
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....s. 28. The issue arising in ground no.5, raised in the assessee's appeal, pertains to the disallowance of the insurance premium paid by the assessee on the insurance policy of one of the partners. 29. The brief facts of the case pertaining to this issue are that during the assessment proceedings, it was observed that an amount of INR 2 lakh was paid by the assessee as insurance premium in respect of an insurance policy of one of the partners. Accordingly, the assessee was asked as to why the said expenditure is allowable. In response, the assessee submitted that financial companies have a practice of ensuring the borrower's life as part of the loan sanction condition. Accordingly, in respect of the loan taken by the assessee, the assessee also paid the insurance premium of one of its partners. The AO, vide order passed under section 143(3) of the Act, disagreed with the submissions of the assessee and held that, as per the provisions of the Act, the insurance premium paid for ensuring the life of the partner is not an allowable expenditure. Accordingly, the AO disallowed the expenditure of INR 2 lakh incurred by the assessee towards insurance premium. The learned CIT(A), ....
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....submitted that the recipient has paid the due tax and therefore the pre-EMI interest paid by the assessee should be allowed. However, apart from making the aforesaid submission, the assessee could not place on record any documents fulfilling the requirement of the provision of the Act in this regard. Accordingly, in the larger interest of justice, we grant one more opportunity to the assessee to make necessary compliance with the statutory requirements in respect of this issue. Therefore, this issue is restored to the file of the jurisdictional AO for de novo adjudication, after considering any documents that may be filed by the assessee. As a result, the impugned order on this issue is set aside, and ground no.6 raised in assessee's appeal is allowed for statistical purposes. 34. The issue arising in ground No. 7, raised in assessee's appeal, pertains to the addition to the annual letting value of the property let out to one of the partners of the assessee. 35. We have considered the submissions of both sides and perused the material available on record. The brief facts of the case pertaining to this issue are that during the assessment proceedings, on perusal of the details....