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TMI Blog2019 (12) TMI 515X X X X Extracts X X X X X X X X Extracts X X X X ..... red the same with another property which was let out on rent. Therefore, once the property in question is shown by the assessee as part of its fixed assets and it was used only for the stay of the security guard and driver of the assessee without charging any rent then said property cannot be assessed to income tax u/s 22 of the Act - the addition made by the AO on account of income from house is not justified and the same is deleted - in favor of assessee. Disallowance of expenses - repair and maintenance expenses - HELD THAT:- As regards the repairs and maintenance expenses incurred in respect of property bearing No. 125, Mahaveer Nagar-1, Kota, the AO determined the annual rental value and allowed deduction u/s 24 of the Act, however ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ld. CIT(A) upheld the said addition by wrongly stating that no further allowance shall be allowed. 2.1 The Ground No. 1 of the assessee is regarding addition made by the AO on account of determination of fair retable value u/s 23 (1)(a) of the Act of House No. 125, Mahaveer Nagar-1, Kota. 2.2 Brief facts of the case are that the assessee is a Private Limited Company which is engaged in the business of publication etc. During the course of assessment proceeding, the AO noted that the assessee has shown in its fixed assets a Plot No. 125, Mahaveer Nagar-1, Kota at ₹ 16,56,756/- as well as construction on this plot at ₹ 10,38,009/-. Further an amount of ₹ 21,954/- was also added to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.3 The assessee challenged the action of the AO before the ld. CIT(A) but could not succeed. 2.4 Before the Tribunal, the ld.AR of the assessee submitted that construction of house in question was not completed during the assessment year under consideration. The AO as well as ld. CIT(A) ignored the fact that during the year the company was having house under construction and only for the purpose of security and watch of under-construction house, guard and driver was allowed to stay there. Therefore, estimation of the fair rent at ₹ 4,04,215/- is not legally justified. He further contended that construction was nothing except a skeleton. It was only walls and boundary wall and was not fit occupation. Only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... construction. As per books of account, this property was shown as a part of the fixed assets which means that the property was shown in the books of account as business assets of the assessee. Since the property was under construction, therefore, the same cannot be considered house property for the purpose of section 22 of the Act until and unless the construction of the house is completed in all respects. The AO has given its finding based on the fact that house in question was given on rent to two persons whereas the assessee came out with explanation that this is not a case of letting out of house property but these are the guards and driver of the assessee who were allowed to stay there for the purpose of security of under construction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in respect of the Ist property is concerned, it is noted that said property is assessed under the head income from house property and 30% deduction was allowed on account of repairs and maintenance u/s 24 of the Act then the expenditure incurred in respect of such properties cannot be allowed separately. As regards the repairs and maintenance expenses incurred in respect of property bearing No. 125, Mahaveer Nagar-1, Kota, the AO determined the annual rental value and allowed deduction u/s 24 of the Act, however the said addition made by the AO to the income from house property is deleted and consequently the repairs and maintenance expenses to the extent of said property shall be capitalized as assessee has claimed that construction was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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