Maintenance charges derived from letting out services taxable under the head “income from other sources”, the Chennai Bench of the Income Tax Appellate Tribunal (ITAT) held as above.
Shri R. Vijayaraghavan, Advocate appeared for the assessee and Shri P. Sajit Kumar appeared for the revenue.
Shri Premkumar Menon,the assessee owns two floors of the commercial property known as Menon Eternity at No.165, St. Mary’s Road, Alwarpet, Chennai. The assessee admitted the rent received about the ownership of these two floors under the head “income from house property” based onthe annual letting value of the space. The assessee also declared maintenance charges from these premises as “income from other sources”.
The A.O considered the maintenance charges as received by the assessee from the premise of the rent agreement as “income from house property” and assessed the same u/s. 24 of the income tax Act. On appeal, the Commissioner of Income Tax(A) confirmed the action of the A.O in making the addition of maintenance charges received on let out property amounting to Rs. 37,98,900/- as assessable under the head “income from house property” as against claimed by the assessee under the head “income from other sources”.
It was noted that this property has got parking lots for parking vehicles belonging to the tenants and their clients. The building has other facilities like a 400KV power supply, pest control services for common areas, security services, a central AC plant, Diesel Generators, Fire Hydrants, buildings lifts etc.
A Coram of Shri Mahavir Singh, vice president and Shri Manoj Kumar Aggarwal, accountant member observed that the portion of clause 2.2 of the lease deed entered into between the assessee and Fichtner Consulting Engineers (India) Ltd. reveals that the services provided for the charge of maintenance charges is distinguishable from the rental receipt for renting out the portion of the property and it is for only providing services.
The Tribunal held that “once, these maintenance charges are attributable to the services provided, the same derived from providing services is to be considered under the head “income from other sources” as claimed by the assessee.” The bench reversed the findings of the lower authorities and allowed the appeal of the assessee.
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