GUNDURAO SURYAVANSHI MADHUKAR (LATE) BY L/R ROHIT M. SURYAVANSHI,BENGALURU vs. DEPUTY COMMISSIONER OF INCOME TAX, CPC, BANGALORE

This appeal is against the order of the CIT(Appeals), National Faceless Assessment Centre, Delhi [NFAC] , Delhi dated 10.6.2022 for the assessment year 2017-18.

The assessee was the owner of two commercial properties and was deriving rental income from these properties. As per the agreement entered into by the assessee with its tenant, assessee received rent and maintenance charges from the tenants.

For the AY 2017-18, assessee filed return of income on 29.7.2017 declaring total income of Rs.88,92,160. The CPC, Bangalore processed the return by making addition of Rs.36,17,264 under the head income from other sources on the ground that the head wise income reflected in Form 26AS of the assessee has not been fully offered to tax in the return of income. The assessee filed a rectification petition which was disposed of by the CPC without granting any relief.

Aggrieved, the assessee filed appeal before the CIT(A). The assessee submitted before the CIT(A) that one of his deductor has quoted wrong section filing its quarterly TDS returns and due to variance in declaration of income under particular section, the CPC assessed the income from other sources. The assessee also submitted that the deductor has already corrected its quarterly TDS return and submitted the correct Form 26AS before the CIT(A). The CIT(A) after perusing the corrected 26AS submitted by the assessee, deleted the addition, except for an amount of Rs.4,00,323, being the difference between the income appearing in 26AS and income declared in return. Aggrieved, the assessee is in appeal before the Tribunal.

The assessee ld AR submitted that the impugned addition of Rs.4,00,323 is very much part of the income declared by assessee. The ld. AR further submitted that the amount collected as maintenance charges on which TDS u/s. 194C have been spent in full by the assessee towards making the payment of Rs.3,57,717 to Tandem Allied Services Pvt. Ltd., the service provider who maintained the infrastructure facility, security and common area of the rented properties and the assessee had also spent Rs.53,000 towards overhead expenses. The ld. AR drew our attention to Schedule VII of the statement of income where the assessee has offered the income of Rs.4,00,323 against which the above expenses have been claimed as a deduction. It is therefore submitted by the ld. AR that the income has already been offered to tax and therefore the addition confirmed by the CIT(A) should be deleted.

The ld. DR relied on the orders of the lower authorities.

We have heard both the parties. On perusal of the materials on record we notice that the assessee has offered the amount of Rs.4,00,323 in Schedule VII to the statement of income against which expenses are claimed which resulted in nil income. Hence the observation of the CIT(A) with regard to the income not being declared in the return is not factually correct. Further it is noticed that the assessee has submitted various invoices and other documents in support of the payment of maintenance charges to Tandem Allied Services and overhead which are claimed as a deduction from the income offered. It is the contention of the ld. AR that the amount paid towards maintenance charges is an admissible deduction u/s. 57(iii) as the same was spent by way of making payment to service provider who maintains the rented premises from where the rent and maintenance charges are earned by the assessee. We also notice that these invoices / documents have not been verified by the CIT(A) while confirming the addition of Rs.4,00,323 and therefore we remit the issue back to the AO for verification of expenses claimed by the assessee against the maintenance charges received from the tenants and allow the same in accordance with law. It is ordered accordingly.

In the result, the assessee’s appeal is allowed for statistical purposes.