Is maintenance paid by the tenant to the society, income of the landlord?

By Vijay Kumar

You let out your flat to somebody for some rent. Flats are bad examples of cooperative living but nevertheless an urban necessity. Now flats have good Samaritans to look after the maintenance and there are societies and welfare associations to manage this welfare of the residents. Now these associations are not exactly charitable organizations; they run on maintenance charges collected from the residents be they tenants or owners and anyone living in a flat gets reconciled to this fact- except of course our income tax authorities.

They raised an objection that maintenance charges paid by the tenant, is income from house property in the hands of the landlord. Even the very fact, that the tenant was paying these charges direct to the society and not to the landlord, did not impress the Income Tax officers.

And the case reached the Tribunal. The ITAT wondered how the expenditure of maintenance charges paid to the society can be treated as income. Obviously there was a basic flaw and the ITAT allowed the appeal of the assessee.

The issued involved an amount of about Rs. 80,000/- for the period 1996-97 and after about eight years the Tribunal granted relief to the poor assessee – Mrs Kokila D Ambani!

Read this interesting case in 2005-TIOL-122-ITAT-MUM