The Tax Publishers2020 TaxPub(DT) 4318 (Mum-Trib)


Section 22 Section 23 Section 24(a)

Watchman's salary would be claimed as standard deduction @ 30% under section 24(a) as such, assessee's claim under sections 22 and 23 would not be allowed and deducted from rental income being the standard rent.

Income from house property - Computation of annual value - Watchman's salary claimed prior to claim standard deduction under section 24(a) -

The issue arising in this appeal was the maintainability of the allowance of watchman's salary, claimed at Rs. 46,66,061, from the rental income (Rs. 91,07,102), assessed under section 22, i.e., prior to the claim of standard deduction under section 24(a) at the rate of 30% thereof, which was thus claimed on the rent amount net of salary claimed, i.e., on Rs. 44,41,041. Assessee's case qua allowance of watchman's salary was essentially with reference to its' past history, having been claimed and allowed since inception and, further, having received a favourable verdict whenever the matter travelled to the Tribunal. Held: The watchman's salary is even otherwise unrelated to the earning of rent per se. It does not represent a cost which could be said to determine the rental capacity of a house property. The assessee's case was without any factual or legal basis. The expenditure on watchman's salary had no bearing on the rental income, or its earning, so that it cannot even otherwise be regarded as contemplated under section 23, or under section 24(a), qua which a gross (lumpsum) allowance is now provided at a fixed rate (sum). In other words, the notion of the assessee obtaining any 'benefit' or 'advantage' on account of the allowance of this sum, against another (business) income, where so, is misconceived, both in law and on facts. The issue raised was thus, subject to the consideration of the assessee's claim qua watchman's salary as business expenditure, decided in the affirmative, i.e., in favour of the Revenue-appellant. The assessee's income from house property shall stand, accordingly, increased by Rs. 32,66,243, i.e., net of standard deduction @ 30% on the claim of salary at Rs. 46.66 lakhs, disallowed in computing the annual value under section 22 read with section 23, or as deduction under section 24(a).

Relied:CIT v. British Paints (India) Ltd. (1991) 188 ITR 44 (SC) : 1991 TaxPub(DT) 898 (SC), CIT v. C. Parak & Co. (India) Ltd. (1956) 29 ITR 661 (SC) : 1956 TaxPub(DT) 141 (SC) and Kedernath Jute Mfg. Co. Ltd. v. CIT (1971) 82 ITR 363 (SC) : 1971 TaxPub(DT) 366 (SC)]. Distinguished:Star Gold Pvt. Ltd. v. Dy. CIT [ITA No. 349/Mum/2015, dated 22-6-2016] Asha Ashar v. ITO (2016) 46 ITR (Trib) 492 (Mum) : 2016 TaxPub(DT) 1389 (Mum-Trib) and Dy. CIT v. Sir Sobha Singh & Sons (P.) Ltd. (2015) 153 ITD 157 (Del-Trib) : 2015 TaxPub(DT) 2014 (Del-Trib).

REFERRED : Humayun Suleman Merchant v. CCIT (2016) 242 Taxman 189 (Bom-HC) : 2016 TaxPub(DT) 3850 (Bom-HC), CIT v. National Taj Traders (1980) 121 ITR 535 (SC) : 1980 TaxPub(DT) 862 (SC), Orissa State Warehousing Corporation v. CIT (1999) 237 ITR 589 (SC) : 1999 TaxPub(DT) 1252 (SC) and CIT v. Calcutta Knitwears (2014) 362 ITR 673 (SC) : 2014 TaxPub(DT) 1547 (SC)] assessment years 1997-98 and 1998-99, (in ITA Nos. 4580 and 5201/Mum/2001, dated 17-9-2004).


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