Ajit K. Sengupta, J. - (1.) In this reference under Section 256(1) of the Income-tax Act, 1961, for the assessment year 1967-68, the following question of law has been referred to this court : "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the commission paid to the broker in order to let out a house or any portion of it at a fair rent was an admissible deduction as collection charges within the meaning of Section 24(1)(viii) of the Income-tax Act, 1961, and in this view directing the Income-tax Officer to allow brokerage of Rs. 15,000 paid by the assessee as collection charges ?"
(2.) Shortly stated, the facts are that the assessee-company derived income from letting out its own house property. While computing the said income, the assessee claimed deduction of Rs. 15,000 paid by it as brokerage to one Mr. Kamlesh Gulati for letting out the second floor of the premises No. 225, Lower Circular Road, Calcutta. The income-tax authorities disallowed this claim as they were of the opinion that such deduction was not permissible while computing the taxable income from house property.
(3.) On second appeal, at the instance of the assessee, the Tribunal directed that disallowance of Rs. 15,000 be deleted by observing as under: "The expenditure to collect rents would include salary of an employee engaged for the purpose and/or commission paid to a broker in order to let out a house or any portion of it at a fair rent. Moreover, there is no dispute about the fact that even after inclusion of this amount, the collection charges remained within the statutory limit of six per cent. Accordingly, the Tribunal allowed the claim of the assessee as an admissible expenditure.";