THE issue before the Bench is - Whether income derived from the
airconditioning and other charges of the let out property can be considered as
income from other sources entitled for deduction of expenses u/s 57. And the
answer goes in favour of the assessee.
The assessee had received rent of Rs. 45,00,049/- from letting. The Assessee had also received a sum of Rs. 66,25,957/- on account of air conditioning, electricity and water charges. The assessee had declared the rental income under the head "income from house property" and the air conditioning and other charges had been declared as income from other sources against which property maintenance expenses of Rs. 82,54,091/- had been claimed resulting into net loss of Rs. 20,28,134/- under the head " income from other sources". The AO held that since the assessee had let out the property on rent alongwith air conditioning and other services the entire income should be assessed as income from house property. The AO disallowed the deduction claimed on account of property maintenance charges on the ground that the same was not allowable as deduction under the head "income from house property. The CIT (A) held that these charges cannot be split up and confirmed the order of AO.
On Appeal before the Tribunal the AR submitted that income from house property was assessable only in respect of bonafide annual value of land and building and not in respect of services if any provided by the landlord. The DR relied on the Judgment of Apex Court in case of Shambhu Investment Pvt Ltd.
Having heard the parties, the Tribunal held that,
++ the income tax under the head "income from house property" is required to be charged on the bonafide annual letting value of land and building. In case the landlord in addition to letting out the building has also provided some services, the income from such services has to be assessed as income from business or income from other sources depending upon the nature of services rendered;
++ income from air conditioning and other charges has to be assessed as income from other sources. While computing the income from other sources the assessee will be entitled for deduction of expenses u/s 57. This aspect of allowability of expenses u/s 57 is required to be examined at the level of AO.
Facts of the
case
The assessee had received rent of Rs. 45,00,049/- from letting. The Assessee had also received a sum of Rs. 66,25,957/- on account of air conditioning, electricity and water charges. The assessee had declared the rental income under the head "income from house property" and the air conditioning and other charges had been declared as income from other sources against which property maintenance expenses of Rs. 82,54,091/- had been claimed resulting into net loss of Rs. 20,28,134/- under the head " income from other sources". The AO held that since the assessee had let out the property on rent alongwith air conditioning and other services the entire income should be assessed as income from house property. The AO disallowed the deduction claimed on account of property maintenance charges on the ground that the same was not allowable as deduction under the head "income from house property. The CIT (A) held that these charges cannot be split up and confirmed the order of AO.
On Appeal before the Tribunal the AR submitted that income from house property was assessable only in respect of bonafide annual value of land and building and not in respect of services if any provided by the landlord. The DR relied on the Judgment of Apex Court in case of Shambhu Investment Pvt Ltd.
Having heard the parties, the Tribunal held that,
++ the income tax under the head "income from house property" is required to be charged on the bonafide annual letting value of land and building. In case the landlord in addition to letting out the building has also provided some services, the income from such services has to be assessed as income from business or income from other sources depending upon the nature of services rendered;
++ income from air conditioning and other charges has to be assessed as income from other sources. While computing the income from other sources the assessee will be entitled for deduction of expenses u/s 57. This aspect of allowability of expenses u/s 57 is required to be examined at the level of AO.
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