Anita Chaudhry, J. - (1.) THE instant appeal filed under Section 260 -A of the Income Tax Act, 1961 (for brevity, the 'Act') is directed against the order dated 28.06.2005 (Annexure A -1) passed by the Income Tax Appellate Tribunal, Chandigarh Bench "B" (hereinafter, to be referred as 'Tribunal', in short) in ITA No. 535/Chd./2002 relating to the assessment year 1998 -99.
(2.) ON 7.8.2006, the instant appeal was admitted to determine the following substantial question of law: - "That whether under the facts and circumstances of the case the Income Tax Appellate Tribunal was justified in law and on interpreting various other provisions of Section 22, 23, 24 r.w Section 2(24) and Section 4 that the amount of commission of brokerage paid to the Property Dealers to the extent of Rs. 16,54,000/ - is not allowable as a deduction against the rental income and the assessee is to be taxed on the total rental income received without any such deduction." The factual matrix. The appellant - assessee is engaged in the business of running a Hotel, a Cinema Hall and owns a commercial building No. 275, situated at Captain Gaur Marg, Sriniwas Puri, Okhla, New Delhi. During the year under appeal, the appellant assessee rented out the said commercial site and showed the annual income thereof under the head "income from house property" to the tune of Rs. 51,00,000/ - and consequently showed the income to be taxed under the said head to the extent of Rs. 12,45,734/ -. However, the assessee claimed deduction of Rs. 16,54,000/ - as commission being paid to two different commission agents, namely, Ever Bright Agencies and M/s. Jain Estates, also claimed to be income tax assessees and were instrumental in letting the commercial building on rent. The assessee claimed that only because of intervention of these property agents, it got the best rent of its property and according to it, the commission paid to the said agents was normal expenditure in the nature of this trade. The assessee claimed that the commission paid is a charge on rental income and, thus, liable to be deducted from the actual amount of rent received by it.
(3.) THE Assessing Authority did not accept the argument and while relying upon the provisions contained in Section 24(1) of the Act, disallowed the commission paid by the assessee to the property agents, vide order dated 15.11.2000.;