Gauhati High Court
Assistant Commissioner Of Income Tax vs Mohanlal Rupesh Kumar on 25 August, 2000
Equivalent citations: (2001)70TTJ(GAU)931
ORDER
S. Bandyopadhyay, A.M:
In this departmental appeals the following grounds of appeal have been taken up :
"1. For that, on the facts and in the circumstances of the case, the Commissioner (Appeals) erred in law in directing the assessing officer to allow deduction of depreciation and electrical expenses from house property income.
2. For that any other ground or grounds may be allowed to be raised at the time of hearing."
2. In the assessment order, the assessing officer has assessed the rental income of the assessee as income from house property. He has declined to allow depreciation and electrical expenses on the ground that there is no provision for allowing the same.
It was submitted before the Commissioner (Appeals) that the property had been let out by the assessee with all furniture and fixtures and the assessee was also required to provide for air- conditioner, etc. It was, thus, contended that the rent received by the assessee was of the nature of composite rent for the accommodation as well as in respect of furniture and fixtures. It was also submitted that the assessee was required to bear the electrical expenses. It was furthermore claimed that all such expenditure had been allowed in the assessments of the assessee in the past.
3. The Commissioner (Appeals) passed his order as follows :
"I notice that the claim of the appellant as admitted by the authorised representative has been allowed as far as depreciation and electrical expenses are concerned. In view of the matter, I would direct the assessing officer to allow the claim of the appellant and to give relief accordingly."
4. In the departmental appeal it is strongly contended by the learned Departmental Representative that there being no provisions in the Income Tax Act for allowing electrical expenses as well as depreciation, the action of the Commissioner (Appeals) in allowing the same in incorrect. In support of this proposition, the learned Departmental Representative has relied on the following two judgments
(i) Indian City Properties Ltd. v. CIT (1965) 55 ITR 262 (Cal); and
(ii) Sultan Bros. (P) Ltd. v. CIT (1964) 51 ITR 353 (SC).
5. On the other hand, the learned counsel for the assessee contends that the claims of the assessee are made under section 23 of the Income Tax Act, 1961, in the matter of determination of the annual letting value of the property. It is further contended before us that what the assessee let out is a fully furnished house and the rent received by the assessee represents the composite rent. In support of his contention that in such circumstances rent in required to be apportioned and electrical expenses, etc. will have to be allowed, the learned counsel of the assessee has relied on the following decisions :
(i) Karani Properties Ltd. v. CIT (1971) 82 ITR 547 (SC).,
(ii) CIT v. Jyotsna Rani Saha (1999) 9 DTC 428 (Cal-HC) : (1999) 239 ITR 916 (Cal);
(iii) CIT v. Kanak Investments (P) Ltd. (1974) 95 ITR 419 (Cal), and
(iv) CIT v. Naga Mills Tea Ltd. (1973) 89 ITR 236 (SC).
It has been held in all the above-mentioned judgments that when building with furniture, etc. are also let out or certain additional facilities are provided, the gross rental is required to be split up into the rent for the building as well as the rental competent in respect of the furniture or the payment required to be made by the tenant in connection with the additional facilities. The income of the latter type is required to be assessed as income from other sources and all necessary deductions are required to be allowed.
In view of the above legal position and taking into consideration the facts of the present case, we are of the view that the total rent received by the assessee in this case in required to be apportioned into the rent for the building as such and the same in respect of furniture and fixtures. The annual letting value of the building is required to be computed on the basis of the apportionment in respect of the building and necessary deductions as allowable under section 24 of the Act are to be allowed therefrom. There cannot be any doubt about the fact that depreciation on the building is not allowable in such circumstances. So far as, however, the apportionment of the rent corresponding to the letting out of the furniture and fixtures is concerned, the said income is required to he assessed as income from other sources. Outgoings like electrical expenses, etc. are to be allowed and even depreciation on the furniture and fixtures should also be allowed.
6. The impugned order of the Commissioner (Appeals) on this issue is, thus, being set aside and the issue is being restored back to the file of the assessing officer for computing the income from house property and income from other sources separately after making an apportionment of the gross rental into two components on a fair basis. The deduction from each component are to be allowed on the basis of the discussion as made by us above.
7. The departmental appeal is partially allowed to the above extent.