2026 (8) TMI 1352

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....nit Income Tax Department (for brevity 'Ld. AO'), order passed under Section 143(3) r.w.s. 144B of the Act, date of order 26.09.2022. 2. The assessee had filed the return of income, declaring income of Rs. 34,63,33,680/-. Return was processed u/s 143(1) of the Act at income of Rs. 37,31,79,960/- after making disallowance of Rs. 2,68,46,283/- claimed by the assessee u/s 115BBG of Act. Subsequently, the case was selected for scrutiny under CASS to examine the issue related to depreciation cum capital gains income of sale of property and high interest expenditure on income cost. During the assessment proceeding, the Ld. AO had added back in multiple heads. The aggrieved assessee filed an appeal before the Ld. CIT(A). The Ld. CIT(A) partly a....

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....ot to assign, underlet or transfer the Lessees' interest therein so as to cause any division by metes and bounds or otherwise to alter the nature of this present demise." 4. But the Ld. CIT(A) rejected the assessee's claim of sub-letting charges, as the assessee has already claimed the standard deduction u/sec. 24 of the Act. The Ld. AR argued that considering the provision of section 23(1)(b) of the Act the assessee is eligible to get the deduction of sub-letting charges over & above the standard deduction. The subletting charge is primary expenses for running the rental business. The Ld. AR contended that the identical issue was duly considered by the Coordinate Bench ITAT Mumbai, 'G' Bench in the case of M/s.Western Cooperative Es....

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....e MIDC. In turn, the assessee commercially exploited the leased property by letting it out and earned rental income, which has been duly offered to tax. Therefore, the payment of the aforesaid charges was wholly and exclusively incurred for earning such rental income and was allowable as a deduction. The Ld. AR further pointed out that the assessee had consistently claimed the said deduction for Assessment Years 2018-19 to 2020-21. In particular, for A.Y. 2018-19, the Ld. AO, while completing the assessment under section 143(3) read with sections 143(3A) and 143(3B) of the Act vide order dated 31.03.2021, did not make any disallowance in respect of the subletting charges. 6. The Ld. DR argued and stands in favor of the orders of revenue ....

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....0/- paid by the assessee to the MIDC are liable to be deducted while computing the income from house property. It is an undisputed fact that the assessee had obtained the leasehold property from MIDC and, in terms of the Lease Agreement, was permitted to sublet the property only upon payment of the prescribed subletting charges to MIDC. The rental income earned from such commercial exploitation of the leasehold property has been duly offered to tax by the assessee. We find that the identical issue has already been considered by the Coordinate Bench of the Tribunal in the case of Western Industrial Cooperative Estate Ltd. (supra), wherein it was held that the subletting charges paid to MIDC constitute an integral cost for earning the rental ....