9911796707
TMI Blog1997 (6) TMI 49X X X X Extracts X X X X X X X X Extracts X X X X ..... mentioned in the lease deed. The assessee also received advance rent of Rs. 4,90,000 at the time of letting out of the house. This lease and advance rent were procured through services of Shri Parveen Sethi who was paid the sum of Rs. 12,500. The above amount was claimed as collection charges under section 24(1)(viii) of Income-tax Act. The Assessing Officer denied the claim as no evidence was filed in support thereof. 3. The assessee impugned above disallowance in appeal before the CIT(A) and reiterated the claim. The assessee also produced receipt in respect of sum paid to Shri Sethi. On consideration of receipt the learned CIT(A) observed that the receipt did not mention the purpose for which payment was made to Shri Sethi. The learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thought to rival submissions of the parties. We have also gone through the terms of the lease dated4-5-1988. It is an agreed position that Shri Sethi to whom amount in question was paid, was engaged to find out a tenant for assessee's premises at Safdarjung Enclave,New Delhi. He in fact found one who took the premises on lease at monthly rent of Rs. 20,000 and also paid a sum of Rs. 4,90,000 towards rent in advance. For above services, sum of Rs. 12,500 was paid to Shri Parveen Sethi as brokerage/commission. The above amount is sought to be deducted under clause (viii) of sub-section (1) of section 24 which at the relevant time read as under : " (viii) any sums spent to collect the rent from the property, not exceeding 606 of the annual ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent. The aim and purpose of amount spent has to be seen for determining admissibility of expenditure. If proper and reasonable construction is not placed on the words, it would lead to great hardship and thus deprive many people of their genuine claims of amount spent in litigation with tenants to collect rent. 6. A simple illustration can be seen in case of a land owner of a defaulting tenant not paying rent in spite of repeated requests. The landlord is forced to engage a lawyer to take legal steps so that the tenant pays and landlord ' collects the rent '. The fee is paid to lawyer with sole purpose of collecting rent. From the action taken by the lawyer, the following three results can flow : (a) The tenant pays the rent to the lawy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stom and practice, there was agreed/implied contract between the parties that Shri Sethi would perform following two services : (1) That he would find a good tenant for the assessee. (2) That he would get some advance rent from the tenant. Shri Sethi in fact found a tenant who paid advance rent of Rs. 4,90,000 to the assessee. Thus payment made to Shri Sethi had direct connection with collection of rent. It is difficult to say that services rendered by Shri Sethi had no connection with collection of advance rent of Rs. 4,90,000. The claim could not be denied merely because Shri Sethi found tenant for the assessee and performed some other services too. In our opinion, the payment in dispute satisfies all the conditions of clause (viii) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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