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Income Tax Appellate Tribunal, DELHI BENCH ‘F’, NEW DELHI
Before: SH. SHAMIM YAHYA & SH. SUDHIR KUMAR
Held that since the maintenance and other charges were paid by the assessee, it was rightly held to be deductible from the rent while computing the annual letting value.
7.1 We also find in the case of M/s. Suman Didwania Vs. ACIT (supra), Hon'ble Tribunal has held as under:
"3. We have heard the parties. The Ld. Counsel placed his reliance on the decision of the ITAT in the case of Sharmila Tagore vs. JCIT 93 TTJ 483 and in the case of ITO vs. Gopichand P. Godwani 1 SOT 374 (Mum). The Ld. D.R. placed reliance on the orders of the authorities below. We find that the assessee's claim is covered by the decision of the ITAT, Mumbai in the case of Sharmila Tagore (supra) in the said case it is held that the maintenance charges paid by the assessee have to be deducted even determining the annual value of the property u/s.23. We, accordingly, following the decision of the co-ordinate Bench allow the grounds taken by the assessee and direct the A.O. to re- compute the income under the head 'income from house property'. 7.2 We find in the case of ITO Vs. Gopichand P. Godhwani (supra) the Hon'ble tribunal has held as under:
"5. We have carefully considered the rival submissions in the light of material placed before us. It is the contention of the assessee that the actual rent received by it is in excess of fair rent or standard rent under the rent control legislation. If this contention of assessee is correct, then the house property income has to be determined under the provisions of section 23(1)(b) property income has to be assessed under section 23(1)(a). Section 23(1)(a) & (b) being relevant provisions otherwise the house applicable for deciding the present controversy are reproduced below:
23. (1) For the purposes of section 22, the annual value of any property shall be deemed to be (a) the sum for which the property might reasonably be expected to let from year to year; or (b) where the property or any part of the property is let and the actual rent received or receivable by the owner in respect thereof is in excess of the sum referred to in clause (a), the amount so received or receivable; It will be relevant to reproduce below the observations of jurisdictional High Court in the case of CIT v. J.K. Investors (Bombay) Ltd. (2001) 248 ITR 723 (Bom) relating to the above provision of Income-tax:
In this matter, we are required to consider the scheme of taxation of income from house property. Section 22 says that the measure of income from house property is its annual value. The annual value is to be decided in accordance with section 23. Sub-section (1) of section 23. by virtue of the amendment with effect from the assessment year 1976-77, has two limbs, namely, clauses (a) and (b). Clause (a) states that the annual value is the sum for which the property might reasonably be expected to be let from year to year. Clause (b) covers a case where the property is let and the actual rent is in excess of the sum for which the property might reasonably be expected to be let from year to year. In other words, insertion of clause (b) by the Taxation Laws (Amendment) Act, 1915, covers a case where the rent for a year actually received by the owner is in excess of the lawful rent which is known as the fairrent or standard rent under the rent control legislation. The provisions of section 23(1)(a) of the Income Tax Act apply both to owner-occupied property as also to property which is let out and the measure of valuation to decide the annual value is the standard rent or the fair rent. However, section 23(1)(b) only applies to cases where the actual rent received is more than the reasonable rent under section 23(1)(a) of the Act and it is for this reason that section 23(1)(b) contemplates that in such cases the annual value should be decided on the basis of the actual rent received.
It is not disputed by revenue that only section 23(1)(b) is applicable to the present case as it is also not the case of assessing officer as he has computed the house property income as per actual rent received. In this view of the situation, if the outgoings in respect of which additions have been deleted by CIT (A) were the liability of the assessee, the same should be excluded from the assessable income as the net amount only can be considered which is received by the assessee or is eceivable by the assessee as per express provisions of section 23[1](b). However, this fact has not been considered ascertained that whether the amounts claimed by the assessee and disallowed by the assessing officer in respect of car-parking, water charges and municipal charges and other charges were the actual liability of the assessee or not. This factual aspect has to be examined as per the terms of agreement as well as keeping in view the factual aspect of the matter. We, therefore, consider it necessary to restore these appeals as well as Cross Objections to the file of assessing officer to determine the fact that whether expenses claimed by the assessee on account of car parking, water charges, municipal charges and other charges (as shown in the charts framed buy the assessee and reproduced abovel were the liability of the assessee and were outgoings from the assessees rental income shown in respect of the property. If it is so, the same are rightly allowed by the CIT (A) as the assessee is entitled to get the same. The assessing officer will determine the house property income of the assessee in accordance with the above directions. We may point out here that the learned authorised representative of the assessee also accepted that for the purpose of examining this factual aspect, the matter may be restored to the assessing officer. We order accordingly. The appeals filed by the revenue and Cross Objections filed by the assessee are considered allowed for statistical purposes.
We considering the Ratio of judicial decisions, the factual aspects and provisions of Section 23(1)(b) of the Act are of the view that the assessee is entitled for claim of deduction of lease rent paid to the Bombay Port Trust(BPT) against the Leave and License fee/rent received from the tenants in determining the annual value of the property. Accordingly, we set aside the order of the CIT(A) and direct the Assessing officer to delete the addition and allow the grounds of appeal of the Assessee.
In the result, the appeal filed by the assessee is allowed.
9. We considering the Ratio of Judicial decisions, the factual aspect and provision of Section 23 (1) (b) of the Act are of the view that the assessee is entitled for claim of deduction of Mixed uses Charges paid to the MCD against the use of residental properties for commercial activities. Accordingly, we set aside the order of the Ld. CIT(A) and direct the Assessing officer to delete the addition and allow the grounds of appeal
of the Assessee.
10. In the result the appeal of the assessee is allowed. Order pronounced in the open court on 30.04.2025