HIGH COURT OF
Mira Lal & Sons
v.
Commissioner of Income-tax
R.K. AGRAWAL AND VIKRAM NATH, JJ.
IT REFERENCE NO. 134 OF 1995
December 6, 2006
Section 24 of Income-tax Act, 1961 - Income from house
property - Deductions - Assessment year 1986-87 - Assessee disclosed an annual
letting value of its property and claimed deduction on account of collection
charges which comprised of salaries given to employees, conveyance expenses
etc. – Assessing Officer restricted claim to a certain amount – Tribunal
recorded a finding that assessee’s employees were not only collecting rent but
were also doing supervision work of repairs of property and confirmed action of
Assessing Officer – Whether since findings recorded by Tribunal did not suffer
from any legal infirmity, Tribunal was justified in its action – Held, yes
FACTS
The assessee
was deriving income from property and interest.
The assessee disclosed an annual letting value of the property and
claimed deduction from the annual letting value on account of collection
charges which comprised of salary given to 12 employees, conveyance expenses
and car and legal expenses. The
Assessing Officer concluded that for collection of the rent, the services of 12
employees was unnecessary and similarly expenses on conveyance was not
justified. The Assessing Officer, accordingly, restricted the deduction of
collection charges to Rs. 30,000 only. On appeal, the Deputy Commissioner
(Appeals), in absence of any supporting documentary evidence, confirmed the
order of the Assessing Officer. On second appeal, the Tribunal observed that
the employees were engaged by the assessee for overall work connected with the
property, such as, repairs, maintenance, taxes, banking work etc. and,
accordingly considered the allowance of Rs. 30,000 to be reasonable.
On reference:
HELD
With
regard to the details of the expenditure incurred by the assessee, no
supporting documents were filed to show that the entire expenditure had been
incurred only on collecting the rent and finding of the Tribunal, that the
employees were not only collecting the rent but were also doing the work of
supervision of repair works, did not suffer from any legal infirmity. The
assessing authority is not entitled to make a pure guess but is supposed to
make an assessment with reference to the evidence and material on record. It
would not be applicable to a case where the only source of income of the
assessee was in respect of income from house property. Further, in view of the
findings recorded by the authorities including the Tribunal that the employees
engaged by the applicant were not exclusively doing the work of collection of
rent, the Tribunal, was justified in apportioning the expenditure incurred
towards collection charges and towards repairs. [
Thus,
the
Tribunal was correct in law in confirming the action of the lower authorities
in allowing deduction for 30,000 only. [