Gross rent - House property - Deduction of expenditure for electricity relating to lights in passages, stair cases privies, washing places compound etc. and gardeners and sweepers salaries. - Income Tax - 551/CBDT

INSTRUCTION NO. 551/CBDT Dated : June 7, 1973 Section(s) Referred: 23 Statute: Income - Tax Act, 1961 Board had pointed out by their circular letter No. 36/5/64-IT(AI) dated 16-5-1964 that as the Municipal authorities usually deduct amounts included in the gross rentals on account of amenities provision by the landlord to the tenants, such as maintenance of lifts, provisions of common lights etc., no deduction is permissible for these items where the Municipal valuation is taken as the basis of the letting value. 2. It has been brought to the notice of the Board that the Bombay Municipal Corporation fixes the ratable value of properties in the following manner:- Starting from the gross rent, a deduction is allowed for water tax and balalkhor tax and a further allowance of 10% of the figure so arrived at is made for other expenses and repairs. It does not make a separate allowance in respect of:- (i) expenditure on electricity relating to lights in passages, stair cases privies, washing places compound etc. and (ii) gardeners and sweepers salaries. In Bombay and other places where a similar procedure is followed, the Income-tax Officer has to add back the statutory allowance of 10% to arrive at the gross annual value. In such a case the I.T.O. has to allow a deduction for expenditure of the type mentioned above. Before giving such deductions, Income-tax Officers should satisfy themselves that such allowances have not been made by the local authority while arriving at the ratable value. 3. The intention behind the circular F.No.36/5/64-IT(AI) dated 16-5-1964 was only to avoid a double allowance. This petition may please be brought to the notice of all the assessing authorities.