STAR GOLD P.LTD, MUMBAI V. DCIT 5(3), MUMBAI

ITA 351/MUM/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0035 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: H
• Next Hearing Date: 27-06-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 13-01-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M C OMI NINGSHEN
• Assessee Lawyers: VISHWAS V MEHENDALE
• Keywords: Business income; Business expenditure
• Section: 142(1)

Judgement Text

1 ITA NO.351/MUM/2015 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH H,MUMBAI BEFORE SHRI JOGINDER SINGH (JUDICIAL MEMBER) AND SHRI G MANJUNATHA (ACCOUNTANT MEMBER) ITA NO.351/MUM/2015 (ASSESSMENT YEAR: 2011-12) M/S STAR GOLD PVT LTD PLOT NO.63, STREET NO.13 MIDC MAROL, ANDHERI (E) MUMBAI-400 093 PAN : AAICS3712N VS DY.CIT-5(3), MUMBAI APPELLANT RESPONDENT APPELLANT BY SHRI VISHWAS V MEHENDALE RESPONDENT BY SHRI M.C. OMI NINGSHEN DATE OF HEARING 25 -06-2017 DATE OF PRONOUNCEMENT 30- 06-2017 O R D E R PER G MANJUNATHA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST ORDER OF COMMISSIONER OF INCOME-TAX (APPEALS)-9, MUMBAI DATE D 17-11-2014 AND IT PERTAINS TO ASSESSMENT YEAR 2011-12. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE C OMPANY, ENGAGED IN THE BUSINESS OF PROVIDING BUSINESS FACILITIES AND INFRA STRUCTURE FOR BUSINESS, FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2011-12 ON 16-08-2011 DECLARING TOTAL INCOME AT RS.89,14,061 WHICH WAS SUBSEQUENTLY REVISED ON 21-02-2012 2 ITA NO.351/MUM/2015 DECLARING TOTAL INCOME AT RS.1,59,63,771. THE CASE HAS BEEN SELECTED FOR SCRUTINY AND NOTICES U/S 143(2) AND 142(1) OF THE A CT WERE ISSUED. IN RESPONSE TO NOTICES, THE AUTHORIZED REPRESENTATIVE OF THE AS SESSEE APPEARED FROM TIME TO TIME AND FURNISHED RELEVANT DETAILS, AS CALLED F OR. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTICED THAT THE ASS ESSEE IS OWNER OF PROPERTY SITUATED AT PLOT NO.63, STREET NO.13, MIDC , ANDHERI (E), MUMBAI-400 093 CONSISTING OF 1 ST & 2 ND FLOOR HAVING TOTAL BUILT UP AREA OF 18,954 SQ.FT. AND AFORESAID PROPERTY WAS LEASED TO M/S FULLERTON INDI A CREDIT COMPANY LTD UNDER A LEASE AGREEMENT DATED 09-01-2008. THE ASSESSEE H AS ENTERED INTO TWO LEASE AGREEMENTS, ONE FOR LEASING OF PREMISES AND ANOTHER FOR PROVIDING AMENITIES TO THE BUILDING. THE ASSESSEE HAS TREATED RENTAL R ECEIPTS UNDER THE HEAD INCOME FROM HOUSE PROPERTY WHEREAS COMPENSATION R ECEIVED TOWARDS PROVIDING AMENITIES HAS BEEN CONSIDERED UNDER THE H EAD INCOME FROM BUSINESS. THEREFORE, THE AO ASKED THE ASSESSEE TO EXPLAIN AS TO WHY COMPENSATION RECEIVED ON AMENITIES SHOWN UNDER THE HEAD BUSINESS INCOME SHOULD NOT BE TAXED UNDER INCOME FROM HOUSE PROPER TY. IN REPLY, ASSESSEE SUBMITTED THAT IT HAS ENTERED INTO LEAVE & LICENCE AGREEMENT WITH THE TENANT FOR THE SAID BUILDING ALONG WITH FURNITURE AND OTHE R FACILITIES INCLUDING CAR PARKING, BENEFIT OF SANITARY FITTINGS, WATER SUPPLY , ADDITIONAL ELECTRICITY SUPPLY FOR WHICH SEPARATE AGREEMENT HAS BEEN ENTERED INTO, WHICH HAS BEEN 3 ITA NO.351/MUM/2015 CONSIDERED UNDER THE HEAD INCOME FROM BUSINESS. THE ASSESSEE FURTHER SUBMITTED THAT IT WAS ALSO PROVIDING FACILITIES SUC H AS SECURITY SERVICES, MAINTENANCE OF BUILDING, PANTRY SERVICES, ETC. HEN CE, THE ASSESSEE WAS SHOWN BUSINESS INCOME FOR COMPENSATION RECEIVED TOWARDS P ROVIDING AMENITIES AFTER CLAIMING EXPENDITURE. 3. THE AO, AFTER CONSIDERING EXPLANATIONS OF THE ASSES SEE OBSERVED THAT THE WORDINGS AND EXPRESSIONS USED IN THE AMENITIES AG REEMENT POINTED OUT THAT RECEIPTS FROM THE USE OF AMENITIES WERE IN THE NATU RE OF INCOME FROM HOUSE PROPERTY ONLY. THE AO FURTHER OBSERVED THAT THE A MENITIES PROVIDED BY THE ASSESSEE WERE PART AND PARCEL OF THE PREMISES LET O UT AND NO SEPARATE SERVICES WERE RENDERED BY THE ASSESSEE IN ANY MANNER AS CONT ENDED. THE ASSESSEE MERELY SPLIT RENT AGREEMENT INTO TWO PARTS TO MAKE IT CONVENIENT SO THAT IT CAN OFFER ONE PART AS INCOME FROM HOUSE PROPERTY AND THE OTHER PART AS INCOME FROM BUSINESS SO AS TO CLAIM EXPENDITURE. ONCE THE LICENSOR HAS LEASED THE PREMISES, THE LICENSEE IS AUTOMATICALLY ENTITLED TO USE THOSE FACILITIES. MERE SPLITTING UP OF RENT INTO TWO PAR TS DOES NOT MEAN THAT INCOME FROM AMENITY CHARGES IS NOT FROM LETTING OUT OF THE PROPERTY. THE AO, AFTER ANALYZING THE AGREEMENTS ENTERED INTO BY THE ASSESS EE OBSERVED THAT THE SO- CALLED AMENITIES PROVIDED TO THE ASSESSEE IS IN THE NATURE OF INSEPARABLE FACILITIES ATTACHED WITH THE PREMISES WHICH CANNOT BE CONSIDERED AS A SEPARATE 4 ITA NO.351/MUM/2015 ACTIVITY OF BUSINESS SO AS TO CLAIM THE SAID INCOME UNDER THE HEAD, INCOME FROM BUSINESS. THE AO FURTHER OBSERVED THAT IT WA S PERTINENT TO MENTION THAT THE LICENSEE HAS DEDUCTED TAX AT SOURCE ON THE ENTI RE AMOUNT INCLUDING THE COMPENSATION PAID TO THE ASSESSEE U/S 194-I AS REN T; THEREFORE, TACITLY ACCEPTING THAT ALL THE RECEIPTS RELATING TO THE SAI D PROPERTY ARE IN THE NATURE OF HOUSE PROPERTY INCOME. ACCORDINGLY, THE AO TREATED RECEIPTS FROM AMENITY CHARGES AS PART OF RENTAL INCOME AND ASSESSED THE S AME UNDER THE HEAD INCOME FROM HOUSE PROPERTY. INSOFAR AS EXPENDITU RE CLAIMED AGAINST COMPENSATION CHARGES, THE AO OBSERVED THAT SINCE AS SESSEE HAS NO OTHER BUSINESS ACTIVITY AND IS ONLY EARNING INCOME FROM H OUSE PROPERTY, THE CLAIM OF BUSINESS EXPENDITURE INCLUSIVE OF INTEREST WAS TO B E DISALLOWED; HOWEVER, THE ASSESSEE WAS ALLOWED STANDARD DEDUCTION AS PER SECT ION 24 ON COMPENSATION RECEIPT. 4. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE PRE FERRED APPEAL BEFORE THE CIT(A). BEFORE CIT(A), THE ASSESSEE REITERATED ITS SUBMISSIONS MADE BEFORE THE AO. THE ASSESSEE FURTHER SUBMITTED THAT AS PER THE PROVISIONS OF SECTION 23 OF THE INCOME-TAX ACT, 1961, THE ANNUAL LETTING VALUE OF THE PREMISES IS THE AMOUNT FOR WHICH THE PROPERTY MIGHT REASONABLY BE E XPECTED TO LET OUT FROM YEAR TO YEAR OR THE ACTUAL RENT RECEIVED OR RECEIVA BLE, WHICHEVER IS MORE. THEREFORE, FOR COMPUTATION OF ANNUAL VALUE, ONLY TH E RENTAL INCOME HAS TO BE 5 ITA NO.351/MUM/2015 CONSIDERED AND NOT THE SERVICE CHARGES FOR PROVIDIN G EXTRA FACILITIES AND SERVICES. THE ASSESSEE, REFERRING TO THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS NATIONAL STORAGE PVT LTD (1967) 66 ITR 596 (SC) SUBMITTED BEFORE CIT(A) THAT INCOME DERIVED FROM RENDERING SE RVICES IN ADDITION TO LETTING OUT OF THE PROPERTY WAS INCOME DERIVED FROM CARRYIN G ON AN ADVENTURE IN THE NATURE OF TRADE, THEREFORE, COMPENSATION RECEIVED F ROM THE TENANT FOR PROVIDING ADDITIONAL SERVICES, WHICH ARE NOT CONNEC TED TO THE LETTING OUT OF PREMISES HAS BEEN RIGHTLY ASSESSED UNDER THE HEAD, INCOME FROM BUSINESS. THE AO, WITHOUT APPRECIATING THE FACTS, HAS SIMPLY CONSIDERED AMENITY CHARGES UNDER THE HEAD INCOME FROM HOUSE PROPERTY, WHICH IS INCORRECT. IN SUPPORT OF ITS ARGUMENTS, THE ASSESSEE RELIED UPON THE DECI SION OF HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS CHENNAI PROPERTIES & IN VESTMENTS LTD (2008) 303 ITR 33 (MAD). 5. THE CIT(A), AFTER CONSIDERING THE RELEVANT SUBMISSI ONS OF THE ASSESSEE OBSERVED THAT THE GROUND WAS COVERED BY HIS EARLIER DECISION IN ASSESSEES OWN CASE FOR AY 2008-09 WHEREIN AT PARAGRAPH 5.1 OF THE ORDER IT WAS HELD THAT AMENITY CHARGES RECEIVED FROM PROVIDING FACILITIES WAS ASSESSABLE UNDER THE HEAD, INCOME FROM HOUSE PROPERTY. SINCE THE FACT S ARE ALMOST IDENTICAL FOR THE YEAR UNDER CONSIDERATION, HE HELD THAT THE ENTI RE INCOME FROM AMENITY CHARGES IS TAXABLE UNDER THE HEAD INCOME FROM HOUS E PROPERTY. INSOFAR AS 6 ITA NO.351/MUM/2015 DISALLOWANCE OF EXPENDITURE IS CONCERNED, THE CIT(A ) OBSERVED THAT INTEREST WAS ALLOWED TO ASSESSEE IN ASSESSMENT YEARS 2009-10 & 2010-11; HOWEVER, WITHOUT ANY CONVINCING REASONS, THE AO HAS NOT ALLO WED INTEREST DURING THE YEAR UNDER CONSIDERATION BESIDES NOTICING THAT ON P ERUSAL OF BALANCE-SHEET OF THE ASSESSEE, THE AMOUNT OF THE BORROWED CAPITAL AL MOST MATCHED WITH THE ASSETS, I.E. THE BUILDING WHICH HAS BEEN UTILISED H AS YIELDED INCOME FROM HOUSE PROPERTY MEANING THEREBY THAT THE BORROWED FUNDS AR E UTILIZED FOR ACQUISITION OF PROPERTY AND THERE IS NO PROOF OF DIVERSION OF B ORROWED FUNDS. UNDER THESE CIRCUMSTANCES, THE AO WAS DIRECTED TO ALLOW INTERES T CLAIMED BY THE ASSESSEE. WITH THESE OBSERVATIONS, THE CIT(A) PARTLY ALLOWED THE APPEAL FILED BY THE ASSESSEE. AGGRIEVED BY THE ORDER OF CIT(A), THE A SSESSEE IS IN APPEAL BEFORE US. 6. THE LD.AR FOR THE ASSESSEE SUBMITTED THAT THE LD.CI T(A) ERRED IN CONSIDERING COMPENSATION FOR USE OF AMENITIES AND F ACILITIES AS INCOME FROM HOUSE PROPERTY WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAS PROVIDED ADDITIONAL FACILITY SUCH AS SECURITY SERVICES, ADDI TIONAL LOAD OF ELECTRICITY SUPPLY, PARKING SERVICE AND OTHER RELATED SERVICES WHICH AR E NOT CONNECTED TO LETTING OUT OF PREMISES. THE AR FURTHER SUBMITTED THAT IF THE MAIN OBJECT OF THE ASSESSEE IS LETTING OUT OF PREMISES AND EARNS RENT THEREFROM, INCOME SO EARNED SHOULD BE TREATED AS BUSINESS INCOME. SINCE THE AS SESSEE IS INVOLVED IN THE 7 ITA NO.351/MUM/2015 BUSINESS OF PROVIDING FACILITY MANAGEMENT SERVICES AND INFRASTRUCTURE FOR BUSINESS, IT HAS RIGHTLY TREATED COMPENSATION RECEI VED TOWARDS PROVIDING AMENITIES UNDER THE HEAD INCOME FROM BUSINESS. I N SUPPORT OF HIS ARGUMENT, THE LD.AR RELIED UPON THE DECISION OF HON BLE SUPREME COURT IN THE CASE OF RAYALA CORPORATION LTD VS ACIT 2016) 386 IT R 500 (SC) AND ALSO ITAT MUMBAI BENCH DECISION IN THE CASE OF KAVITA MARKETI NG PVT LTD VS ITO (2016) 47 CHH 228 (MUM TRIB). 7. THE LD.DR, ON THE OTHER HAND, SUPPORTED THE ORDERS OF AUTHORITIES BELOW AND SUBMITTED THAT THE ISSUE HAS BEEN ALREADY CONSI DERED BY THE ITAT, IN ASSESSEES OWN CASE IN THE EARLIER YEARS AND OBSERV ED THAT THE RECEIPTS TOWARDS AMENITIES ARE TO BE CONSIDERED AS PART OF R ENTAL INCOME. THE LD.DR FURTHER SUBMITTED THAT THE ASSESSEE HAS EARNED COMP ENSATION FOR PROVIDING AMENITY CHARGES TO THE SAME TENANT, WHO OCCUPIED TH E PREMISES BY SPLITTING RENTAL AGREEMENT INTO TWO PARTS WHICH IS EVIDENT F ROM THE FACT THAT THE TENANT HAS DEDUCTED TAX AT SOURCE U/S 194-I OF THE INCOME- TAX ACT, 1961 ON TOTAL PAYMENTS INCLUDING COMPENSATION PAID FOR PROVIDING AMENITIES. THEREFORE, THE AO HAS RIGHTLY ASSESSED COMPENSATION RECEIVED UNDER THE HEAD INCOME FROM HOUSE PROPERTY AND HIS ORDER SHOULD BE UPHELD. IN SUPPORT OF HIS ARGUMENT, HE RELIED UPON THE DECISION OF THE HONBLE SUPREME COU RT IN THE CASE OF SHAMBHU INVESTMENT (P) LTD VS. CIT (2003) 263 ITR 143 (SC) AND SUBMITTED THAT INCOME 8 ITA NO.351/MUM/2015 DERIVED FROM LETTING OUT FURNISHED PREMISES ON MONT HLY RENT TO VARIOUS PARTIES ALONG WITH FURNITURE, FIXTURES, ETC. AND ALSO PROVI DING THEM COMMON SERVICES LIKE WATCH AND WARD, ELECTRICITY, WATER AND OTHER A MENITIES WITHOUT ANY SEPARATE CHARGE WAS ASSESSABLE AS INCOME FROM HOUS E PROPERTY AND NOT AS BUSINESS INCOME. 8. WE HAVE HEARD BOTH THE PARTIES AND CONSIDERED THE M ATERIAL AVAILABLE ON RECORD. THE FACTUAL MATRIX WHICH LEADS TO THE IMPU GNED ADDITION IS THAT THE ASSESSEE HAS LET OUT PREMISES BY ENTERING INTO TWO SEPARATE AGREEMENTS FOR LETTING OUT PREMISES AND PROVIDING AMENITIES. THE ASSESSEE HAS CONSIDERED RENTAL RECEIPTS UNDER THE HEAD INCOME FROM HOUSE P ROPERTY, WHEREAS COMPENSATION RECEIVED FOR PROVIDING AMENITIES HAS B EEN CONSIDERED AS INCOME FROM BUSINESS. THE AO HAS ASSESSED COMPEN SATION RECEIVED FROM PROVIDING AMENITIES UNDER THE HEAD INCOME FROM HOU SE PROPERTY ON THE GROUND THAT MERE SPLITTING UP OF RENTAL AGREEMENT C ANNOT CHANGE THE CHARACTER OF INCOME WHICH HAS TO BE ASSESSED UNDER A PARTICUL AR HEAD OF INCOME. THE AO FURTHER OBSERVED THAT AS PER THE DETAILS FURNISHED BY THE ASSESSEE, LIKE LEAVE & LICENCE AGREEMENT, THESE TWO AGREEMENTS ARE INSEPAR ABLE FROM EACH OTHER WHICH IS EVIDENT FROM THE ANNEXURE ANNEXED TO THE A GREEMENT WHICH STATES THAT THE ASSESSEE NEEDS TO PROVIDE CERTAIN AMENITIE S IN PURSUANCE TO LEAVE & LICENCE AGREEMENT. THE AO FURTHER OBSERVED THAT TH E TENANT HAS DEDUCTED TDS 9 ITA NO.351/MUM/2015 ON TOTAL PAYMENTS INCLUDING COMPENSATION PAID FOR P ROVIDING AMENITIES U/S 194-I. THEREFORE, IT IS ABUNDANTLY CLEAR THAT THE SOCALLED COMPENSATION RECEIVED FOR PROVIDING AMENITIES IS PART AND PARCEL OF RENTAL RECEIPTS. IT IS THE CLAIM OF THE ASSESSEE THAT ITS MAIN OBJECT IS TO PR OVIDE BUSINESS FACILITIES AND INFRASTRUCTURE FOR BUSINESS AND ONCE IT IS INVOLVED IN THE BUSINESS OF PROVIDING PREMISES ON RENTAL BASIS, THEN THE RENTAL RECEIPTS RECEIVED IS ASSESSABLE UNDER THE HEAD INCOME FROM BUSINESS. THE ASSESSEE FURT HER SUBMITTED THAT IT HAS ENTERED INTO SEPARATE AGREEMENT FOR PROVIDING AMENI TIES WHICH IS NOT CONNECTED TO THE LETTING OUT OF THE PREMISES, THERE FORE, ANY CHARGES RECEIVED FOR PROVIDING ADDITIONAL SERVICES CANNOT BE CONSIDE RED AS ANNUAL LETTING VALUE AS PER SECTION 23 OF THE INCOME-TAX ACT, 1961. THE ASSESSEE FURTHER CONTENDED THAT IT IS PROVIDING ADDITIONAL SERVICES LIKE WATCH AND WARD, ADDITIONAL LOAD OF ELECTRICITY SUPPLY AND OTHER RELATED SERVICES FOR W HICH IT HAS SEPARATELY CHARGED THE TENANT AGAINST WHICH THE ASSESSEE HAS INCURRED EXPENSES. THEREFORE, THE SAID ACTIVITIES COME UNDER THE HEAD INCOME FROM BU SINESS. 9. THE QUESTION TO BE RESOLVED HERE IS WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE COMPENSATION RECEIVE D BY THE ASSESSEE FOR PROVIDING AMENITIES TO THE TENANT, WHO OCCUPIED THE PREMISES OF THE ASSSSEE, IS ASSESSABLE UNDER THE HEAD INCOME FROM HOUSE PRO PERTY OR INCOME FROM BUSINESS. A SIMILAR ISSUE HAS BEEN CONSIDERED BY THE ITAT, SMC BENCH, 10 ITA NO.351/MUM/2015 MUMBAI IN ASSESSEES OWN CASE FOR AY 2008-09 IN ITA NO.349/UM/2015 DATED 22-06-2016. THE CO-ORDINATE BENCH OF THIS TRIBUNAL , UNDER SIMILAR FACTS, HAS HELD THAT RECEIPTS TOWARDS AMENITIES ARE TO BE CONS IDERED AS PART OF RENTAL INCOME. HOWEVER, THE EXPENSES INCURRED TOWARDS SEC URITY SERVICE AND PANTRY SERVICES ARE NOT CONNECTED TO THE RENTAL INCOME AND HENCE, THEY SHOULD BE DEDUCTED FROM THE RECEIPTS FROM AMENITIES. THE REL EVANT PAT OF THE ORDER OF THE CO-ORDINATE BENCH IS EXTRACTED BELOW:- 6. I FURTHER NOTICE THAT THE ASSESSEE HAS LET OUT THE TWO STOREY BUILDING TO ONLY ONE TENANT. THE NATURE OF AMENITI ES CLAIMED TO HAVE BEEN PROVIDED CONSISTED OF SECURITY SERVICES, BUILD ING MAINTENANCE, CAR PARKING FACILITY, PANTRY SERVICES. THE ELECTRICITY EXPENSES INCURRED BY THE ASSESSEE ARE BEING REIMBURSED BY THE TENANT. I NOT ICE THAT THE SECURITY SERVICES AND PANTRY SERVICES ARE NOT GERMANE TO THE LETTING OF BUILDING, BUT OTHER SERVICES ARE PART AND PARCEL OF LETTING OF BUILDING. HENCE THE DECISION RENDERED BY THE HON'BL E SUPREME COURT IN THE CASE OF SHAMBU INVESTMENTS (SUPRA) SHA LL SQUARELY APPLY TO THE ASSESSEE. I ALSO AGREE WITH THE LD D.R THAT TH E PRINCIPLE OF RESJUDICATA SHALL NOT APPLY TO INCOME TAX PROCEEDIN GS. 7. ACCORDINGLY I AM OF THE VIEW THAT THE PREDOMINAN TLY, THE RECEIPTS TOWARDS AMENITIES ARE TO BE CONSIDERED AS PART OF RENTAL INCOME ONLY. HOWEVER, AS STATED EARLIER, THE EXPENSES INCU RRED TOWARDS SECURITY SERVICES AND PANTRY SERVICES ARE NOT CONNECTED TO T HE RENTAL INCOME AND HENCE THEY SHOULD BE DEDUCTED FROM THE RECEIPTS TOW ARDS AMENITIES. ACCORDINGLY THE ONLY NET RECEIPTS AFTER DEDUCTION O F ABOVE SAID INCOME SHOULD BE CONSIDERED AS PART OF RENTAL RECEIPTS. I ORDER ACCORDINGLY. THE FACTS REMAIN UNCHANGED. THE ASSESSEE FAILS TO BRING ON RECORD ANY EVIDENCES TO PROVE THAT THE FACTS ARE DIFFERENT FRO M THE FACTS CONSIDERED BY THE TRIBUNAL IN THE EARLIER ASSESSMENT YEAR. THEREFORE , WE ARE OF THE VIEW THAT 11 ITA NO.351/MUM/2015 COMPENSATION RECEIVED FOR PROVIDING AMENITIES IS AS SESSABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY, MORE PARTICULARLY, WH EN THE BUILDING IS LET OUT TO THE TENANT TO WHOM AMENITIES ARE PROVIDED BY WAY OF SEPARATE AGREEMENT WHICH IS INSEPARABLE FROM THE LEAVE AND LICENCE AGR EEMENT ENTERED INTO WITH THE TENANT FOR LETTING OUT PREMISES. THOUGH ASSESS EE PLACED ITS RELIANCE ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF RA YALA CORPORATION LTD (SUPRA), WITH DUE RESPECT, WE NOTICE THAT THE FACTS BEFORE THE HONBLE SUPREME COURT ARE ENTIRELY DIFFERENT FROM THE FACTS OF THE PRESENT CASE, THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE CASE LAW RELIED UPON BY THE ASSSESSEE HAS NO APPLICATION TO THE FACTS OF THE ASSESSEES CASE. THE CIT(A), AFTER CONSIDERING RELEVANT FACTS, HAS RIGHTLY UPHELD THE ACTION OF TH E AO IN TREATING COMPENSATION RECEIVED UNDER THE HEAD INCOME FROM HOUSE PROPERTY . WE DO NOT FIND ANY ERROR IN THE ORDER OF THE CIT(A); HENCE WE REJECT T HE GROUND RAISED BY THE ASSESSEE. 10. THE NEXT ISSUE THAT CAME UP FOR OUR CONSIDERATION I S DEDUCTIONS TOWARDS EXPENSES CLAIMED AGAINST COMPENSATION RECEIPTS. TH E ASSESSEE HAS CLAIMED VARIOUS EXPENDITURES AGAINST COMPENSATION RECEIPTS WHILE COMPUTING INCOME UNDER THE HEAD INCOME FROM BUSINESS. ACCORDING T O THE ASSESSEE, IT HAS INCURRED HUGE EXPENDITURE FOR ELECTRICITY CHARGES W HICH IS INCLUDED IN THE RECEIPTS RECEIVED TOWARDS PROVIDING AMENITY SERVICE S. THE ASSESSEE FURTHER 12 ITA NO.351/MUM/2015 CLARIFIED THAT IT HAS INCURRED VARIOUS EXPENSES SUC H AS SECURITY CHARGES, RATES & TAXES, ETC. IN CONNECTION WITH PROVIDING SERVICES T O THE TENANT. THE AO DISALLOWED EXPENDITURE CLAIMED BY THE ASSESSEE ON T HE GROUND THAT THE AMOUNT OF COMPENSATION RECEIVED BY THE ASSESSEE IS ASSESSABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY AGAINST WHICH ONL Y STANDARD DEDUCTION PROVIDED U/S 24 IS ALLOWABLE. 11. HAVING HEARD BOTH THE SIDES AND CONSIDERED MATERIAL AVAILABLE ON RECORD, WE FIND THAT THE AO HAS DISALLOWED TOTAL EX PENDITURE CLAIMED BY THE ASSESSEE AGAINST BUSINESS RECEIPTS ON THE SOLE GROU ND THAT COMPENSATION RECEIVED FOR PROVIDING AMENITIES IS ASSESSABLE UNDE R THE HEAD INCOME FROM HOUSE PROPERTY. HOWEVER, THE AO HAS ALLOWED STAN DARD DEDUCTION U/S 24 WHILE COMPUTING INCOME FROM HOUSE PROPERTY. INSO FAR AS OTHER EXPENSES INCLUDING INTEREST PAID ON LOAN IS CONCERNED, THE A O HAS DISALLOWED THE EXPENDITURE. IT IS THE CLAIM OF THE ASSESSEE THAT OUT OF THE TOTAL EXPENDITURE INCURRED, MAJOR PORTION OF EXPENDITURE IS INCURRED TOWARDS PROVIDING ADDITIONAL LOAD OF ELECTRICITY WHICH HAS BEEN REIMBURSED BY TH E SERVICE RECEIVER WHICH IS INCLUDED IN COMPENSATION PAID FOR AMENITY CHARGES W HICH NEEDS TO BE EXCLUDED. WE FIND FORCE IN THE ARGUMENT OF THE ASS ESSEE FOR THE REASON THAT PROVIDING ADDITIONAL SERVICES IN THE FORM OF ELECTR ICITY AND SECURITY SERVICES IS NOT PART AND PARCEL OF PROVIDING PREMISES ON RENTAL BASIS, THEREFORE, ANY 13 ITA NO.351/MUM/2015 CHARGES RECEIVED TOWARDS SERVICES PROVIDED IN THE F ORM OF ELECTRICITY SUPPLY AND SECURITY SERVICES NEED TO BE EXCLUDED FROM THE GROSS RECEIPTS RECEIVED. IN RESPECT OF AMENITY CHARGES, THE ASSESSEE HAS FILED NECESSARY DETAILS IN SUPPORT OF EXPENDITURE INCURRED FOR PROVIDING ELECTRICITY A ND SECURITY SERVICES. ON PERUSAL OF THE DETAILS FILED BY THE ASSESSEE, WE FI ND THAT THE ASSESSEE HAS INCURRED AN AMOUNT OF RS.44,44,226 TOWARDS ELECTRIC ITY EXPENSES AND CLAIMS THAT THE SAME HAS BEEN REIMBURSED BY THE SERVICE RE CEIVER WHICH IS INCLUDED IN THE COMPENSATION PROVIDED FOR AMENITIES. THEREFORE , WE ARE OF THE VIEW THAT ANY AMOUNT PAID TOWARDS REIMBURSEMENT OF ELECTRICIT Y CHARGES NEEDS TO BE EXCLUDED FOR THE PURPOSE OF COMPENSATION RECEIVED F ROM PROVIDING AMENITIES FOR THE PURPOSE OF COMPUTATION OF INCOME FROM HOUS E PROPERTY. ACCORDINGLY, WE SET ASIDE THE ISSUE TO THE FILE OF THE AO AND DIRECT THE AO TO EXAMINE THE CLAIM OF THE ASSESSEE IN REGARDS TO THE DETAILS FURNISHED. IN CASE IT IS FOUND THAT ELECTRICITY CHARGES INCURRED AND REIM BURSED IS INCLUDED IN COMPENSATION PAYMENTS, THEN THE AO IS DIRECTED TO E XCLUDE SUCH CHARGES FOR THE PURPOSE OF COMPUTATION OF GROSS RECEIPTS UNDER THE HEAD INCOME FROM HOUSE PROPERTY. WE FURTHER DIRECT THE AO TO CONSI DER REIMBURSEMENT OF ELECTRICITY CHARGES AND ALLOW EXPENDITURE INCURRED BY THE ASSESSEE FOR PROVIDING SUCH SERVICES SEPARATELY UNDER THE HEAD INCOME FROM OTHER 14 ITA NO.351/MUM/2015 SOURCES. ACCORDINGLY, THE GROUND RAISED BY THE A SSESSEE IS PARTLY ALLOWED, FOR STATISTICAL PURPOSES. 12. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED, FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH JUNE, 2017 SD/- SD/- (JOGINDER SINGH) (G MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT : 30 TH JUNE, 2017 PK/- COPY TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) BY ORDER 4. CIT 5. DR /TRUE COPY/ ASSTT. REGISTRAR, ITAT, MUMBAI