Service Tax Paid and Refund of One Month Rent has to be Deducted while Computing Annual Letting Value of Property: ITAT [Read Order]

While hearing the appeal of ACIT, against Rajiv Nayar wherein Delhi bench of Income Tax Appellate Tribunal held that Service Tax paid and refund of One month Rent has to be deducted while computing Annual Letting Value of Property.

The Tribunal bench comprising Judicial Member Sudhanshu Srivastava and Accountant Member Prashant Maharishi, accountant member were decided so and dismissed the appeal of Revenue.

In instant case Assessee called Rajiv Nayar is a senior Advocate of Delhi High Court, filed his return of income to the tune of Rs. 10,77,55,060/-. The appeal is with respect to assessment proceedings therein AO made the addition on account of rental income under the head “Income from House Property”. During the year under consideration, Assessee earned the rental income of Rs. 2, 57, 44,579/- from flat in Mumbai.

According to the agreement entered into license fee of Rs.30,68,182/- was to be received from the tenant. For that year Assessee was due to receive the sum of Rs. 28,329,547/- during the year. Against this assessee has shown the income of Rs. 2,57,44,579/-. It resulted in the difference of Rs. 25,84,968/-.

Therefore, the Assessing Officer made an addition of Rs. 18,09,631/- to the income from house property. Eventually, CIT (A) deleted the addition by reasoning that one month rent has been paid back to the tenant through banking channel and also added that gross rent received also included the service tax amount which was not to be considered as annual letting value of that particular house.

The counsel for revenue reiterated the submission and relied upon the decision of Assessing Officer. The bench while hearing rival contentions observed that the discrepancies appeared in both form No. 26AS and annual rent shown by the assessee was due to the service tax amount and as well as rent of one month returned back to the tenant.

Also, the tribunal noted that since the CIT (A) directed the AO to give relief, Revenue didn’t raise any objection with respect to the appellate decision.

Accordingly tribunal held that CIT (A) has correctly deleted the addition of Rs. 18,09,631/- under income from house property.