IS THIS AMOUNT TAXABLE

A service provider of Renting of Immovable Property services has deducted the Property Tax paid from the taxable income of service tax.  However, the tenent has separately reimbursed the property tax amount apart from the rent paid.  Department says that, if such amount incurred by the service provider then only deduction is permissible.  Other wise ST is payable on the amount received from the tenent treating the same as taxable income.  Is that correct.