2011 (6) TMI 499 - AT - Income Tax

Income from House property - deductions u/s 24 - dis-allowance of municipal taxes 3.41 crores we are of the view that further disallowance of 25% over and above already disallowed by the assessee is without any basis and unreasonable and accordingly the same is deleted - Decided in favor of the assessee

Summary

Issues involved:
1. Disallowance of brokerage paid against rent received.
2. Disallowance of municipal taxes and Society charges from income from house property.
3. Disallowance of 50% electricity charges.

Analysis:
1. The appellant, a film artist, appealed against the disallowance of brokerage paid against rent received. The appellant decided not to press this ground during the hearing, leading to its rejection.
2. The dispute arose regarding the disallowance of municipal taxes and Society charges from the income from a property. The Revenue authorities disallowed the deduction based on the flat 30% deduction allowed under the Finance Act, 2001. However, the ITAT found that the law allowed for the deduction of municipal taxes as per Section 23(1) proviso, directing the AO to allow the deduction. Similarly, the ITAT allowed the deduction of Society charges based on precedents and the recent decision of the Delhi High Court in CIT vs. R.J. Wood P. Ltd.
3. The issue of disallowance of 50% electricity charges was raised due to the residential premises being used for both personal and office purposes. The AO allocated 50% of the expenses towards personal use, leading to an addition to the total income. The ITAT, after considering the nature of the appellant's profession and usage of the premises, found the additional disallowance unreasonable and deleted the same.

The ITAT's detailed analysis and application of legal provisions and precedents led to the resolution of the issues raised by the appellant in the appeal, resulting in adjustments to the disallowed deductions and charges.