2018 (2) TMI 496 - AT - Income Tax

Deduction as Municipal Taxes and other charges u/s 24 against rental income earned - Income from interest and other income - treated as Income from Other Sources - Appellants submit that the above income is taxable as income from business e do not find any substance in assessee s appeal. The assessee could not claim any expenditure from Income from House Property outside the ambit of Section 24. The expenditure as claimed by the assessee was not covered by the statutory provisions and hence not allowable. The interest income was earned from Capital Gains Bonds which was rightly assessed as Income from Other Sources. Similarly, the assessee failed to show that misc. incomes aggregating to ₹ 48,407/- were, in any way, related to assessee s business and therefore, rightly been assessed as Income from other Sources. - Decided against assessee

Summary

Issues:
1. Classification of income as 'Income from Other Sources' instead of 'Income from Business'
2. Disallowance of maintenance charges in computing income under 'Income from House Property'

Analysis:
1. The appeal contested the order of the Ld. Commissioner of Income-Tax (Appeals) regarding the classification of income as 'Income from Other Sources' instead of 'Income from Business'. The assessee claimed that the income should be taxable as business income, not under other sources. The assessment for the relevant year was framed by the Income Tax Officer. Despite multiple opportunities, the assessee did not appear, and the case was disposed of based on available records. The Tribunal found no substance in the assessee's appeal. The claimed expenditure was not covered by statutory provisions and hence disallowed. The interest income from Capital Gains Bonds and misc. incomes were rightly assessed as 'Income from Other Sources' as they were not related to the assessee's business activities.

2. The second issue revolved around the disallowance of maintenance charges in computing income under 'Income from House Property'. The assessee, a resident corporate entity engaged in warehousing and property letting, faced disallowance of charges against rental income. The charges included maintenance fees and license fees paid to a society. The Tribunal upheld the disallowance, stating that the claimed expenses did not fall under allowable deductions as per Section 24 of the Income Tax Act. The Tribunal dismissed the appeal, affirming the lower authorities' decision and emphasizing that the expenses were not covered by statutory provisions for deduction.

In conclusion, the Tribunal upheld the classification of income as 'Income from Other Sources' and the disallowance of maintenance charges in computing income under 'Income from House Property'. The appeal was dismissed, and the decision was pronounced in January 2018.