2010 (4) TMI 1066 - AT - Income Tax

Summary

Issues involved: Revenue appeal against CIT(A) order deleting disallowances of expenses u/s 24 of Income Tax Act, 1961 and set off of artificial loss.

Disallowed expenses under section 24:
The AO disallowed the assessee's claim for deduction on various expenses totaling &8377; 953,791, stating that only standard deduction u/s 24 of 30% of annual value is allowable for computing income from house property. The CIT(A) deleted this disallowance, citing that the expenses were for additional services provided by the assessee, which should be reduced from the composite rental income to determine the annual value. The Tribunal upheld the CIT(A)'s decision, referencing a similar case precedent and emphasizing that charges for extra services should be deducted from rental income.

Set off of artificial loss:
The AO disallowed the set off of a loss amounting to &8377; 33,359, labeling it as an artificial loss. However, the CIT(A) allowed the set off, considering expenses incurred by the assessee under various heads as necessary for maintaining the registered office of the company and complying with statutory obligations. The Tribunal supported this decision, citing a precedent that such expenses are allowable as business expenditure even if no business activities were conducted in the relevant year.

In conclusion, the Revenue's appeal was dismissed, affirming the CIT(A)'s order in both aspects.