Law & Society

Shambala Properties Pvt Ltd vs Asst. CIT

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The assessee is owning a building and is in the business of real estate development. The assessee declared income from house property and income from other sources. The Learned Assessing officer has completed the assessment at a total income of Rs. 1,16,64,440/- as against the declared income of Rs. 73,17,890/-. The AO has taxed the entire rent received by the tenants under Income from House Property overlooking the fact that it was a composite rent towards the lease of the premises and far providing host of services by the assessee. The AO has not reduced the Service tax amounting to Rs. 17,33,877/- which is included in the rent received from the tenants. The lessees have to pay the service tax but it is the responsibility of the lessor to collect the same and remit it to the Central Govt as per the provisions of Service Tax Act, this aspect has been completely overlooked by the AO. Hence the Service tax collected by the appellant amounting to Rs. 17,33,877/- requires to be reduced from the rent received.

Similar issue had come up before this Tribunal in assessee’s own case in ITA No.214/Bang/2014. Taking a consistent view, Bangalore ITAT remitted the issue in dispute to the AO to reframe the assessment in the light of direction given by the Tribunal in its order for the Assessment Year 2009-10. Accordingly, assessee’s appeal is partly allowed for statistical purposes.

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