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Issues involved: Cross appeals by the assessee and the revenue challenging the impugned order of the Ld. CIT (A)-VII, Mumbai dated 19.02.2009 for the A.Y. 2005-06.
Issue 1: Disallowance of society charges The assessee contended that society charges should be deducted from gross rent as direct charges for earning income. However, the A.O. and Ld. CIT (A) denied this deduction. The Tribunal found that only specific deductions are allowed u/s 23 and 24 for A.Y. 2005-06, and society charges were not included. Relying on legal precedents, the Tribunal upheld the denial of deduction for society charges, dismissing the assessee's appeal. Issue 2: Disallowance of running and maintenance expenditure The assessee claimed running and maintenance expenditure, arguing they were routine expenses even though no business activity was conducted apart from rental and interest income. The A.O. and Ld. CIT (A) rejected this claim, stating that expenses must be justified under specific income heads. The Tribunal agreed, confirming the denial of deduction for running and maintenance expenditure, as the assessee had no other income sources. The appeal was dismissed. Issue 3: Addition to Annual Letting Value (ALV) The A.O. adjusted the ALV based on notional interest on an interest-free deposit received by the assessee, deeming the rent lower than market rates. The Ld. CIT (A) directed to accept the assessee's ALV calculation. The Tribunal referred to guidelines from a High Court case regarding ALV determination and remanded the issue to the A.O. for fresh adjudication in line with those principles. The revenue's appeal was allowed for statistical purposes.
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