2018 (12) TMI 901 - AT - Income Tax

Disallowance of expenditure towards air conditioning and other expenses, lift facilities, common securities, fire fighting system, water charges, electricity and other personal cost - Held that - Notably, in assessment year 2003 04, against income of ₹ 62,25,957 towards air conditioning and other charges, the assessee had claimed property maintenance expenses of ₹ 82,54,091. While examining the allowability of the aforesaid expenditure claimed by the assessee, in pursuance to the directions of the Tribunal, AO having found such expenditure to be directly relatable to the income earned from air conditioning and other charges has allowed them fully. This is evident from the copy of the assessment order passed for A.Y. 2003 04 as submitted in the paper book. On a perusal of the details of expenditure claimed in the impugned assessment year as well as in assessment year 2003 04, find them to be of identical nature. No reason for disallowing a part of the expenditure claimed by the assessee. Accordingly, the disallowance made by the Assessing Officer and sustained by the learned Commissioner (Appeals) is deleted. - Decided in favour of assessee.

Summary

Issues:
Challenge to part disallowance of expenditure claimed by the assessee for the assessment year 2006-07.

Analysis:
The appeal was filed by the assessee against the order passed by the Commissioner (Appeals) regarding the part disallowance of expenditure claimed. The Assessing Officer treated certain charges as income from house property and disallowed a portion of the claimed property maintenance expenses. The Tribunal had earlier directed the Assessing Officer to consider the assessee's claim of deduction under section 57 of the Income Tax Act. The Assessing Officer, after reviewing the submissions and previous decisions, allowed the income from air conditioning and other charges as income from other sources but restricted the property maintenance expenditure. The Commissioner (Appeals) upheld the disallowance, stating that expenses not related to air conditioning and other facilities provided to the tenant are not allowable.

The authorized representative argued that the claimed expenditure directly related to the income earned from air conditioning and other facilities. Referring to previous years, it was highlighted that the Tribunal had consistently directed the Assessing Officer to examine such expenditure directly related to the facilities provided to tenants. The Departmental Representative supported the decisions of the Commissioner (Appeals) and the Assessing Officer.

Upon review, the Tribunal noted that this was the second round of litigation before them. The Department had accepted the income from air conditioning and other charges as assessable under the head income from other sources. The dispute centered on the quantum of allowable expenditure. The Tribunal found that the claimed expenditure was directly related to various facilities provided and had been fully allowed in a previous assessment year. Comparing the nature of expenditures in the impugned assessment year and the previous year, the Tribunal concluded that there was no justification for the disallowance made by the Assessing Officer. Therefore, the Tribunal allowed the assessee's appeal and deleted the disallowance upheld by the Commissioner (Appeals).

In conclusion, the Tribunal ruled in favor of the assessee, emphasizing the direct relation of the claimed expenditure to the income earned from specific facilities provided to tenants.