2011 (12) TMI 727 - AT - Income Tax

Summary

Issues involved:
The appeal concerns the denial of deduction for society charges and non-occupancy charges under the head property income.

Summary:

Issue 1: Society Charges
The assessee claimed deduction for society charges and non-occupancy charges under section 24 of the Income Tax Act. The Assessing Officer (AO) disallowed the claim, citing that standard deduction at 30% of annual value covers such expenses. The CIT(A) upheld the AO's decision. However, the ITAT Mumbai Bench ruled in favor of the assessee, allowing the deduction of society charges from the rental income for the purpose of calculating annual letting value under section 23(1)(b). The Tribunal held that all outgoings for earning rental income are admissible deductions, as per various precedents. Consequently, the assessee was granted the deduction of society charges.

Issue 2: Non-Occupancy Charges
Regarding non-occupancy charges, the ITAT relied on a previous decision in the case of Sharmila Tagore Vs. Jt. CIT, allowing the deduction of non-occupancy charges from the rent received for determining the annual letting value under section 23(1)(b). The Tribunal set aside the CIT(A)'s order and granted the deduction of non-occupancy charges.

Conclusion:
The ITAT Mumbai ruled in favor of the assessee, allowing both the deduction of society charges and non-occupancy charges. The appeal was allowed, and the order of the CIT(A) was set aside.