Rejection of Maintenance Claim u/s 40(a)(ia) of Income Tax Act without Proper Verification: ITAT quashes Order [Read Order]

The New Delhi bench of Income Tax Appellate Tribunal(ITAT) held that the claim of maintenance for building under Section 40(a)(ia) of Income Tax Act, 1961 rejected without proper verification of challan and papers by Commissioner.

M/s. Mall Hotel Ltd, the appellant assesse was a company engaged in the business of hotels, running of cinema theatre, business income from shops and rental income received from the shops. The assessee filed a return of income and claimed maintenance for the buildings, but the assessing officer (AO)disallowed expenses due to nonpayment of amount in Government account.

The Commissioner of Income Tax (Appeals) passed an order against the appeal filed by the asseessee and rejected the disallowance of amount under section 40(a) (ia) of the Income Tax Act made by the assessing officer(AO). Thus the assessee appealed against the order of Commissioner.

Mr. Anand Kumar Pandey, the counsel for the assessee contended that the assessee had filed a copy of the challans, but the Commissioner of Income Tax (Appeals) ignored it while confirming the disallowance, contrary to the material on record. It was also submitted that the Commissioner had erred in sustaining the disallowance of building repair, and the addition made in the present Assessment Year deserves to be deleted.

Mr. S.L.Anuragi, the counsel for the respondent contended that the assessee's expenses are business expenditure against business income, and that they are separate premises.

The two member bench comprising of Shri Yogesh Kumar U.S (Judicial Member) and Shri Anil Chaturvedi(Accountant Member) held that the Commisioner had committed an error in making proportionate disallowance of building repairs treating the same against the rental income. It was thus held that the maintenance claim should be allowed made by the assessing officer and deleted the order passed by the Commissioner while allowing the appeal.

To Read the full text of the Order CLICK HERE

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