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TMI Blog2012 (4) TMI 645X X X X Extracts X X X X X X X X Extracts X X X X ..... g to `.19,61,446/- under section 14A of the Act on the ground that the interest bearing funds were utilized to earn tax free income. 2. (a) The learned Commissioner of Income-tax (Appeals) erred in not allowing a sum of `.33,80,328/- being brokerage and commission paid to brokers for arrangements of lease and for arrangements of sale of space, to arrange for tenants and to negotiate higher amount of rent and deposits as business expenditure on the ground that the said expenditure is in relation to letting out of the property, income from which is chargeable under the head Income from house property and the same cannot be allowed as a business expenditure. 2. Ground no. 1 is regarding the disallowance of interest u/s. 14A. We h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmitted as a deduction u/s.24. He has relied upon the orders of the Tribunal in the case of Varma Family Trust vs. Sixth Income Tax Officer reported in 7 ITD 392 as well as in the case of Sharmila Tagore vs. JCIT reported in 93 TTJ (Mumbai) 483. 6. On the other hand, the learned DR has relied upon the order of the lower authority as well as the order of this Tribunal dated 04.04.2012 in the case of Township Real Estate Developers (India) Pvt. Ltd. in ITA No.1715/Mum/2008 3370/Mum/2010 and ITA No.2072/Mum/2008. He also relied upon the decision of the Hon'ble Punjab and Haryana High Court in the case of Aravali Engineers (P) Ltd. vs. CIT ANR reported in 237 CTR 312 and the decision of Hon'ble Delhi High Court in the case of CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as been approved by the Hon ble Delhi High Court in the case of CIT vs. H.G. Gupta Sons (supra). Paragraph 5 of the judgment reads as under : 5. The annual value of the property, which is the subject of charge, was originally defined in s. 23(1) as The sum for which the property might reasonably be expected to be let from year to year . The annual value is thus the sum for which a landlord could let the premises having regard to the condition of the property and of the revailing circumstances as the language suggest. The taxes are charged on the artificial or notional income. It is based on the annual value of the property. The authorities under the Act, therefore, have to make the assessment on the basis of the notional annual v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved or receivable occurring in cl. (b) of s. 23(1) means net rent after allowance of expenditure in connection with rent Statute does not empower the assessing authority or the assessee either to add or subtract anything from the ALV-Also, the plea of diversion by overriding title cannot be accepted as no obligation has been cast on the assessee to pay brokerage Therefore, commission not allowable as deduction. The Hon ble Punjab Haryana High Court in the case of Aravali Engineers (P) Ltd. (supra) took similar view. Relevant portions of paras 2 and 14 are as under : With regard to commission payment of ₹ 2,50,000 there is no eligibility under any section for the assessee company to claim this expenditure under s. 24. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as the decisions relied on by the ld. counsel of the assessee are concerned, the decision in the case of Banwari Lal Anand vs. ITO was rendered for assessment year 1989-90 when there were various clauses u/s. 24. Clause (vii) was a deduction in respect of land revenue and brokerage was held to be covered under clause (vii). But, since the section itself has been amended, therefore, this decision is no more applicable. The other two decisions i.e. Govind S. Singhania vs. ITO (supra) and Sharmala Tagore v. JCIT can also not be applied because these decisions have not considered the decision of Hon ble Delhi High Court in the case of CIT vs. H.G. Gupta Sons. In any case, the latest decision on this issue in the case of Aravali Engineers (P) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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