Income Tax Appellate Tribunal - Kolkata
Dalhousie Properties Ltd., , Kolkata vs Dcit, Circle - 8(1), Kolkata , Kolkata on 17 January, 2020
आयकर अपील य अधीकरण, यायपीठ - "ए" कोलकाता,
IN THE INCOME TAX APPELLATE TRIBUNAL
KOLKATA BENCH "A" KOLKATA
Before Shri S.S.Godara, Judicial Member and
Dr. A.L. Saini, Accountant Member
ITA No.908-909/Kol/2018
Assessment Years : 2011-12 &
2012-13
Dalhouse Properties Ltd., V/s. DCIT, Circle-8,
3A,Humayun Place, Aayakar Bhawan, P-
Lindsay Street, 7,Chowrinighee
Kolkata-700 087 Square, Kolkata-700
[P AN No. AABCD 0792 N] 069
अपीलाथ /Appellant .. यथ /Respondent
आवेदक क ओर से/By Assessee Shri Soumitra Choudhury, Advocate
राज व क ओर से/By Revenue Shri Dhruba Jyoti Roy, JCIT-SR-DR
सन
ु वाई क तार ख/Date of Hearing 24-12-2019
घोषणा क तार ख/Date of Pronouncement 17-01-2020
आदे श /O R D E R
PER S.S.Godara, Judicial Member:-
These two assessee's appeals for assessment year(s) 2011-12 & 2012- 13 Commissioner of Income Tax (Appeals)-3 Kolkata's separate orders dated 07.05.2014 and 15.03.2018 passed in case No.s 1908/CIT(A)-3/Kol/14- 15 &07/CIT(A)-3/Cir-8(1)/Kol/15-16 respectively involving proceedings u/s 143(3) of the Income Tax Act, 1961; in short 'the Act'.
Heard both the parties. Case file(s) perused.
2. It transpires at the outset that the assessee's identical sole substantive grievance canvassed in these two appeal(s) seeks to reverse the lower ITA Nos.908-909/Kol/2018 A.Ys. 11-12 & 12-13 Dalhousie Properties Ltd. Vs. DCIT, Cir-8, Kol. Page 2 authorities' action partly accepting its service and establishment charges of ₹6,72,619/- and ₹8,33,795/- out of ₹12,85,695/- and ₹13,23,961/-, assessment year-wise respectively. There is no dispute between the parties that the factual backdrop herein is identical in both cases. We therefore deem it appropriate to reproduce the CIT(A)' s detailed discussion reading as under:-
"3. Decision:
Ground No.1 of the appeal is general in nature, hence not adjudicated upon separately.
Ground No.2 & 3 of the appeal are regarding the claim for deduction of establishment charges of Rs.12,85,995/-.
The basic facts of the case are that the appellant has let out a property named Stephen House at 4,B.B.D Bag (East).Kolkata-700001. The property has been let out to more than one hundred tenants. During the previous year, the assessee had received composite rent of Rs.2,23,21,871/-. In the computation of income, the assessee has claimed service charges of Rs.12,85,995/. These expenses are on account of establishment expenses and electricity charges. The AO was of the opinion that the expenses allowable u/s.24 are clearly defined and exhaustive and, moreover, as the assessee has already been allowed a standard deduction of 30% of the annual value, so no further deduction on account of service charges was allowable as per the Act.
Before me, the A/R of the appellant has argued that service charges are allowable and in this regard the appellant has placed reliance on the decision of the jurisdictional ITAT in its own case in ITA No.1714/Kol/2007 and ITA No.No.1715/Kol/2007. The Hon'ble' ITAT in the said decision has held as under:-
"Thus in principle the ITAT has agreed that the gross rent was liable to be reduced by the amount of maintenance charges to arrive or the figure of net rent which constitute the annual letting value for the purpose of computation of house property income. The matter was set aside to the file of AD to verify the facts, whether the rent received by the assessee was gross rent inclusive of the amounts for payment of expenses. This was to be verified on the basis of tenancy agreement. The AO has rejected the assessee's claim because the assessee could not produce the tenancy agreement with the tenants. In our opinion, merely because the tenancy agreement is not available if cannot be concluded that the rent received by the assessee was not composite rent. The AO should have examined the other relevant facts. We find that in assessment year 1996-97 in the order passed u/s.143(3) dated 31.03.1999 the AO has allowed the deduction for service charges claimed while determining the annual letting value for the purpose of computing income from house property. Similarly, in the order passed u/s.143(3) for assessment year 1998-99 vide order dated 27.03.2001 the AO has allowed the deduction of service charges of Rs.7,69,441/-for determining annual letting value. Admittedly the tenants are same in the year under consideration as the property is claimed to have been let out 30 years back. In view of above, when the department has accepted the receipt of composite rent by the assessee in assessment year 1996-97 and 1998-99 and on that basis allowing the deduction for expenses for services rendered by the assessee for determining the annual letting value of the property, there was no ITA Nos.908-909/Kol/2018 A.Ys. 11-12 & 12-13 Dalhousie Properties Ltd. Vs. DCIT, Cir-8, Kol. Page 3 justification for taking different stand in assessment year 1989-90 and 1990- 91. In view of above we allow the assessee's appeal and direct the AO to allow deduction of establishment charges while computing the annual letting value of the property."
On the perusal of the above appeal order, it is observed that the Honble ITAT has given the direction that from the composite rent the amount of maintenance charges was required to be reduced so as to arrive at the figure of the net rent which would constitute the annual letting value for the purpose of computing the income from house property. In this case, it is observed that the composite rent is Rs.2,23,21,871/-. The appellant has received service and maintenance charges of Rs.6,13;376/-. Therefore, the net rent received in this case is Rs.2,17.08,495/-. Respectfully following the decision of the jurisdictional Tribunal in the case of the assessee, the AO is directed to reduce from the value of composite rent the service charges received and the net rent should be considered for the purposes of computing the house property income. In this case, the net rent would therefore be Rs.2,17,08,495/-.The AO to compute income from house property income accordingly. It is observed that the appellant has received service charges of Rs.6,13,376/-.However, the appellant has made claim for deduction of Rs.12,85,995/-. Only service charges to the extent of Rs.6,13,376/-is part of the composite rent which is hereby allowed as per the directions of the Honble ITAT. The claim for additional service charges of Rs.6,72,619/-is not allowed to be reduced from the gross rent as it is not part of the composite rent. The assessee gets part relief on this issue."
3. We have given our thoughtful consideration to rival pleadings. Suffice to say, it has come on record that the CIT(A) has partly reversed the Assessing Officer's reasoning quoting sec. 24 of the Act as amended from time to time regarding deduction allowable in case of house property income. His only case is that it is the corresponding part claim than the entire sum; assessment year-wise whichi deserves to be accepted to the extent indicated hereinabove. We find no reason to sustain the CIT(A)'s findings under challenge. It is made clear that this issue of allowability of the impugned claim(s) is no more res integra as admitted by the CIT(A) as well that the co-ordinate bench decision in assessee's own case (supra) had held that the its tenants have been paying all these sums in the nature of service, establishment and electricity charges etc. for the past very many decades without even having an express agreement(s) to this effect. Learned departmental representative also fails to throws light on the fact that assessee's claims in these two assessment year(s) has nowhere been doubted in the lower proceedings that the same are in the nature of very head(s) as accepted by the lower authorities in all ITA Nos.908-909/Kol/2018 A.Ys. 11-12 & 12-13 Dalhousie Properties Ltd. Vs. DCIT, Cir-8, Kol. Page 4 preceding and succeeding assessment years involving both summary and regular assessments. We therefore hold that the assessee's impugned identical claim that the service and establishment charges sums of ₹12,85,695/- and ₹13,23,961/- deserve to be deducted in eternity. We order accordingly. Necessary computation to follow as per law. The assessee succeeds in its sole substantive grievance therefore.
4. These two assessee's appeals are allowed.
Order pronounced in the open court 17/01/2020
Sd/- Sd/-
(लेखा सद य) ( या)यक सद य)
( A.L.Saini) (S.S.Godara)
(Accountant Member) (Judicial Member)
Kolkata,
*Dkp
*दनांकः- 17/01/2020 कोलकाता ।
आदे श क त ल प अ े षत / Copy of Order Forwarded to:-
1. आवेदक/Assessee-Dalhouse Properties Ltd., 3A, Humayun Place, Lindsay St. Kolkata-87
2. राज व/Revenue-DCIT, Cir-8, P-7, Chowringhee Sq. Kolkata-69
3. संब5ं धत आयकर आय6 ु त / Concerned CIT Kolkata
4. आयकर आय6 ु त- अपील / CIT (A) Kolkata
5. 9वभागीय )त)न5ध, आयकर अपील य अ5धकरण, कोलकाता / DR, ITAT, Kolkata
6. गाड> फाइल / Guard file.
By order/आदे श से, /True Copy/ सहायक पंजीकार आयकर अपील य अ5धकरण, कोलकाता ।