2022 (4) TMI 713 - AT - Income Tax

Disallowing maintenance charges (including non occupancy charges) claimed as deduction while computing income from house property - AO held that neither Sec. 23 nor Sec. 24 provides for the deduction of expenses incurred towards Society Maintenance Charges - claim of maintenance charges against the rental income of the assessee has been disallowed on the ground that it had already claimed 30% deduction u/s. 24(a) - HELD THAT - As decided in own case 2022 (4) TMI 641 - ITAT MUMBAI assessee is entitled for deduction u/s. 23 of the Act apart from the standard deduction u/s. 24(a) of the Act. We direct the AO to verify the claim of deduction of the assessee of the said society maintenance charges paid by the assessee but stated to be obligation of the lessee and stated to be duly included in the gross rent received by the assessee before allowing the claim of the assessee. - Decided in favour of assessee.

Summary

Issues:
Disallowance of maintenance charges claimed as deduction while computing income from house property.

Detailed Analysis:
1. The appellant filed a return of income declaring total income. A scrutiny assessment was completed, and later, proceedings under section 147 of the Act were initiated due to claimed maintenance charges. The Assessing Officer disallowed the expenses, stating that neither Section 23 nor Section 24 provides for deduction of expenses towards Society Maintenance Charges.

2. The appellant appealed before the Ld. CIT(A), who dismissed the appeal. During the appellate proceedings, the Ld. Counsel contended that a coordinate bench of the ITAT had adjudicated a similar issue in favor of the assessee in a previous case.

3. The claim of maintenance charges against rental income was disallowed as the appellant had already claimed a deduction under Section 24(a) of the Income Tax Act, 1961. The appellant argued that society maintenance charges should be allowed in addition to the deduction under Section 24, as they are mandatorily incurred irrespective of property occupancy status.

4. The appellant cited various judicial decisions and argued that society maintenance charges and non-occupancy charges should be allowed under Section 24 read with Section 23 of the Income Tax Act, 1961. They highlighted that similar cases of the appellant's sister concerns were decided in their favor by different CITs(A).

5. The ITAT analyzed the arguments and cited precedents where society maintenance charges were allowed as deductions. They noted that the issue was squarely covered by previous decisions and upheld the claim of deduction for maintenance charges. The ITAT followed the principle of consistency and allowed the appeal of the assessee.

6. In conclusion, the ITAT allowed the appeal of the assessee, directing the Assessing Officer to delete the addition and allow the deduction for maintenance charges. The decision was based on the judicial precedence and the arguments presented by the appellant.

7. The judgment was pronounced in the open court on 31.03.2022, with the ITAT ruling in favor of the appellant based on the arguments presented and the legal precedents cited.