Property Tax paid in respect of Leased Property is allowable as Expenditure: ITAT [Read Order]

The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) in ACIT v M/s Linde Engineering India Pvt. Ltd, held that the tenant is eligible for deduction in respect of the amount of property tax paid on the leased property.

In the instant case, Assessing Officer made disallowed expenditure in respect of Rs.4,67,266/- on account of property tax. Ld.AO made the addition in the hands of the assessee, as assessee was not the owner of the property for which the taxes were paid.

The assessee contended that property taxes have been made in accordance with the terms and conditions of the lease agreement and Assessing Officer is not bringing on record any contrary evidence to justify disallowance of such expenses.

The Tribunal noted that it is an admitted position that the assessee incurred these expenses towards the property taken on the lease as per the agreement entered into by assessee and lessor.

“In our considered opinion, payment of local taxes was agreed by the assessee as per agreement and therefore was binding. Thus, it was an expenditure incurred by the assessee to discharge an obligation under the agreement for purposes of business, which is an allowable expenditure,” the bench said.