1992 (5) TMI 71 - AT - Income Tax

Summary

Issues:
1. Deduction claim for repairs based on Lease Agreement clauses.
2. Disallowance of collection charges for the property.

Deduction Claim for Repairs:
The appeal pertained to the assessment year 1985-86 against an order by CIT (Appeals) XIV, New Delhi. The assessee claimed a deduction of Rs. 15,489 for repairs, which was denied by the Assessing Officer citing clause 13 of the Lease Agreement. The CIT (Appeals) upheld this decision. The assessee contended that as per clauses 7, 13, and 15 of the Lease Agreement, the landlord was responsible for structural defects and substantial repairs, while the tenant was only liable for day-to-day repairs. The Calcutta High Court's interpretation of repair costs was cited, emphasizing substantial repairs. The Supreme Court's decision in a similar case was also referenced to support the deduction claim. However, the Departmental Representative argued that section 24(1)(i) applied, making the tenant responsible for tenantable repairs. The Tribunal analyzed the clauses of the Lease Agreement and held that substantial repairs, as per section 24(1)(i), were the tenant's responsibility, not the lessor's, concluding that the assessee was not entitled to the deduction for repairs.

Disallowance of Collection Charges:
The next ground of appeal concerned the disallowance of collection charges amounting to Rs. 5,576 for the property. The Lease Agreement specified a yearly rental payment without deductions. The assessee had received the rental in advance without incurring any collection expenses. The Tribunal found no evidence to support the claim of collection charges, as the rent was paid in a lump sum in advance. Consequently, the Income-tax Authorities were deemed justified in disallowing the collection charges. As a result, the appeal was dismissed in its entirety.