Sandeep Singh Karhail ORDER
Sandeep Singh Karhail, Member (J)
1. The present appeal has been filed by the assessee challenging the impugned order dated 29/05/2023, passed under section 250 of the Income Tax Act, 1961 ("the Act") by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, ["learned CIT(A)"], for the assessment year 2014-15.
2. In its appeal, the assessee has raised the following grounds:-
"Being aggrieved by the order of the CIT(A), your appellant submits herewith the following Grounds of Appeal (which are taken up without prejudice to each other) for your sympathetic consideration.
1. On the facts and circumstances of the case and in law, the learned CIT(A) erred in not considering the facts that the maintenance charges is not received/credited by the Appellant.
2. On the facts and circumstances of the case and in law, the learned CIT(A) erred in confirming the addition of Rs. 13,00,659/-as income from house property.
3. The Appellant craves leave to add, amend, alter or delete any of the above grounds of appeal."
3. The only dispute raised by the assessee is against the taxation of maintenance charges in its hands as income from house property.
4. The brief facts of the case pertaining to this issue, as emanating from the record, are: The assessee is engaged in the business of construction and development of land and mainly implementing Slum Rehabilitation Project and also earns income from renting of properties. For the year under consideration, the assessee e-filed its return of income on 27/09/2014, declaring a total income of Rs. 2,58,39,675. The return filed by the assessee was selected for limited scrutiny and statutory notices under section 143(2) as well as section 142(1) of the Act were issued and served on the assessee. During the course of assessment proceedings, it was observed that the assessee has given on rent multiplex and office no. 104 and 105 on Neelyog Square to Fame India Ltd, Future Generali India LIC Ltd, and Future Generali India Insurance Co Ltd. From the information available on AIR and ITS, certain discrepancies were found vis-a-vis the income declared in the profit and loss account:-
5. On being asked about the discrepancy of Rs. 13,00,659, in the values shown in the AIR as well as the audited books of account, the assessee submitted that the above parties have paid rent as mentioned in column (3) above and also paid maintenance charges to the proposed society. It was further submitted that the difference of Rs. 13,00,659, was towards the maintenance amount, which is not the income of the assessee.
6. The Assessing Officer ("AO") vide order dated 30/08/2016, passed under section 143(3) of the Act did not agree with the submissions of the assessee and held that no documentary evidence has been furnished by the assessee to prove that the said sum of Rs. 13,00,659, was received by it as maintenance charges. Accordingly, the AO added the aforesaid amount to the total income of the assessee under the head "income from house property".
7. The learned CIT(A), vide impugned order, dismissed the appeal filed by the assessee on this issue and held that the tenants have deducted TDS on the gross amount which is inclusive of the maintenance charge and the assessee has claimed the entire TDS. The learned CIT(A) further held that while computing the gross rent received by the house owner it has to be inclusive of the maintenance charge since payment of maintenance charges is the liability of the house owner. Being aggrieved, the assessee is in appeal before us.
8. We have considered the submissions of both sides and perused the material available on record. As per the assessee, an amount of Rs. 13,00,659, was given by Fame India Ltd, Future Generali India LIC Ltd, and Future Generali India Insurance Co Ltd. directly to the assessee in the maintenance account and it was not paid in the name of the assessee. It is further the contention of the assessee that the three payers deducted tax on it and since the PAN no. of the assessee was used by the three parties, therefore, the transaction was reflected in the account of the assessee. Further, as per the assessee, the amount of maintenance charges whenever received were deposited in a separate bank account not belonging to the assessee but maintained by the Kapole Co-operative Bank Ltd. Society for the specific purpose of collecting maintenance charges and making payments therefrom for the purpose for which said sum was collected. Accordingly, the assessee claimed that the amount of Rs. 13,00,659, was never received by the assessee and the maintenance charges given by three parties were neither the receipt of the income of the assessee as the said charges were not forming part of the receipt of the assessee rather it was deposited in a separate account which was exclusively used by the assessee for maintenance charges. We find that the taxability of maintenance charges in the hands of the assessee came up for consideration before the Co-ordinate Bench of the Tribunal in assessee's own case in M/s.Neelyog Builders Private Limited v/s DCIT, ITA No. 2797/ Mum./2017, for the assessment year 2012-13. The Co-ordinate Bench, vide order dated 10/08/2020, decided a similar issue in favour of the assessee and held that the common maintenance charges cannot be termed as the income of the assessee. The Co-ordinate Bench further directed that the TDS credit against the said receipts as granted to the assessee be withdrawn. The relevant findings of the Co-ordinate Bench, in the aforesaid decision, are reproduced as under:-
"3.2 During assessment proceedings, it transpired that the assessee rented two floors of a building situated at Neelyog Square, Ghatkopar to a corporate entity viz. M/s Fame India Ltd. and reflected rent of Rs. 19.50 Lacs per month i.e. Rs. 234 Lacs per annum. However, the rental income shown in TDS certificates issued by the tenant was Rs. 236.52 Lacs. It transpired that the assessee received differential amount i.e. Rs. 2.52 Lacs in an account viz. Neelyog Builders-Maintenance Account. It was stated by the assessee that the same amount was not received by the assessee but it was towards reimbursement of expenses to the society and therefore not reflected in the assessee's account and not credited to Profit & Loss Account. However, in the absence of any satisfactory documentary evidences, the said sum was added as Income from House Property. However, from the income computations made by Ld. AO in the assessment order, it is evident that the said amount has erroneously been treated as Business Income despite the observation in para-5 that the said amount would be Income from House Property.
3.3 Upon further appeal, Ld. CIT(A) confirmed the addition since no other expenditure except to the extent specified u/s 24 would be allowable to the assessee. Aggrieved, the assessee is in further appeal before us.
4. Upon careful consideration, we find that as per Clause 9.4 of relevant leave and license agreement dated 09/10/2005 entered into by the assessee with the licensee, it was obligatory on the part of licensee to pay all municipal taxes, rates, cess, assessments, outgoings and other levies etc. with respect to rented portion of the property. Till the formation of co-operative housing society, the said amount was paid to the assessee which was credited under separate maintenance account. Upon formation of the co-operative society, the said account was handed over to the co-operative society as per law. Therefore, these receipts "could not be termed as income of the assessee. The cited decision of the Tribunal also supports the proposition that common maintenance charges paid to the society would be deductible from rent received by the assessee. In fact, similar view has been taken by Ld. CIT(A) in assessee's own case for AY 2011-12 vide order dated 19/07/2017, However, as held in 2011-12, TDS credit of Rs. 5,051/-against the said receipts as granted to the assessee shall be withdrawn. We order so."
9. The learned Departmental Representative neither could show us any reason to deviate from the conclusion so reached by the Co-ordinate Bench in the aforesaid decision nor any change in facts or law was alleged. Thus, respectfully following the decision of the Co-ordinate Bench in assessee's own case, cited supra, we delete the addition made by the AO on account of maintenance charges. We further direct that the TDS credit if any granted to the assessee in respect of the maintenance charges be withdrawn. In view of aforesaid directions, the impugned order passed by the learned CIT(A) is set aside and the grounds raised by the assessee are partly allowed.
10. In the result, the appeal by the assessee is partly allowed in terms of our aforesaid directions.
Order pronounced in the open Court on 28/09/2023.
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