PLAZA HOTEL P.LTD, MUMBAI V. DCIT 8(2), MUMBAI

CO 11/MUM/2016

• Counselvise Citation: [2016] 123 COUNSELVISE.COM (IT) 2210 (ITAT-MUMBAI)
• Duration Of Justice: 1 month(s) 5 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 09-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 04-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M SALMAN KHAN
• Assessee Lawyers: ARUN G VERMA
• Keywords: Business income; Earning of tax free income; Revised return
• Section: 14A; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH C, MUMBAI BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.5313/M/2014 ASSESSMENT YEAR: 2011-12 DEPUTY COMMISSIONER OF INCOME-TAX-8(2), ROOM NO.209/216A, 2 ND FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400020 VS. M/S. PLAZA HOTELS PVT. LTD., 70-C, NEHRU ROAD, VILE PARLE (E), MUMBAI - 99 PAN: AAACP2117N (APPELLANT) (RESPONDENT) CO NO.11/M/2016 ASSESSMENT YEAR: 2011-12 M/S. PLAZA HOTELS PVT. LTD., 70-C, NEHRU ROAD, VILE PARLE (E), MUMBAI - 400099 PAN: AAACP2117N VS. DEPUTY COMMISSIONER OF INCOME-TAX-8(2), ROOM NO.209/216A, 2 ND FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400020 (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI ARUN G. VERMA, A.R. REVENUE BY : SHRI M. SALMAN KHAN, D.R. DATE OF HEARING : 09.03.2016 DATE OF PRONOUNCEMENT : 09.03.2016 O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THE ABOVE TITLED APPEAL BY THE REVENUE AND THE CORR ESPONDING CROSS OBJECTION BY THE ASSESSEE HAVE BEEN PREFERRED AGAIN ST THE ORDER DATED 27.03.2014 OF THE COMMISSIONER OF INCOME TAX (APPEA LS) [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO ASSESSMENT YEAR 2011- 12. 2. THE REVENUE HAS TAKEN THE FOLLOWING GROUNDS OF A PPEAL: '1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN ITA NO.5313/M/2014 & CO NO.11/M/2016 M/S. PLAZA HOTELS PVT. LTD. 2 LAW, THE LEARNED CIT(A) ERRED IN UPHOLDING THE ACTI ON OF THE ASSESSEE OF TREATING THE RECEIPTS RECEIVED FROM THE HOTEL BUSIN ESS AS BUSINESS INCOME WITHOUT APPRECIATING THAT THE ASSESSEE HAS GIVEN HO TEL PROPERTY OWNED BY IT TO KAMAT HOTELS (INDIA) LTD ON A BUSINE SS CONTRACT AGREEMENT WHEREBY THE ASSESSEE IS TO RECEIVE 1% OF THE TOTAL REVENUE AND ALSO THE INTEREST FREE DEPOSIT, WHICH IS NOTHIN G BUT A RENT ON THE PROPERTY AND THE SAME IS TAXABLE U/S 22 OF THE IT ACT? 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN UPHOLDING THE ACTI ON OF THE ASSESSEE OF TREATING THE RECEIPTS RECEIVED FROM THE HOTEL BUSIN ESS AS BUSINESS INCOME AND THEREBY NOT DETERMINING THE ALV AS PER THE PROV ISIONS OF S 23(1)(A) OF THE ACT WITHOUT APPRECIATING THAT IF TH E RATEABLE VALUE UNDER MUNICIPAL LAWS DOES NOT REPRESENT THE CORRECT FAIR RENT, THEN AS PER SECTION 23(1)(A) OF THE ACT, THE ASSESSING OFFICER MAY DETERMINE THE SAME ON THE BASIS OF MATERIAL/ EVIDENCE ON RECORD, WHICH THE ASSESSING OFFICER HAS CORRECTLY DONE? 3. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE A.O. BE RESTORE D. 4. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUNDS OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 3. AT THE OUTSET, THE LD. A.R. OF THE ASSESSEE HAS STATED THAT THE ISSUE RAISED VIDE GROUND NO.1 IN REVENUES APPEAL IS COVERED IN FAVOUR OF THE ASSESSEE BY THE EARLIER DECISIONS OF THE TRIBUNAL FOR A.Y. 2006 -07, 2007-08, 2008-09, 2009-10 AND 2010-11. HE HAS FILED THE COPY OF THE ORDERS OF THE TRIBUNAL FOR THE EARLIER ASSESSMENT YEARS. HE HAS FURTHER SUBMI TTED THAT IF THE GROUND NO.1 IS DECIDED IN FAVOUR OF THE ASSESSEE, THE ISSUE RAI SED VIDE GROUND NO.2 WILL BECOME INFRUCTUOUS. 4. THE LD. D.R. HAS ALSO ADMITTED THAT THE ISSUE IN VOLVED IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE TRIBU NAL IN EARLIER ASSESSMENT YEARS IN THE OWN CASE OF THE ASSESSEE RIGHT FROM A. Y. 2006-07. 5. AFTER GOING THROUGH THE IMPUGNED ORDER OF THE LD . CIT(A) AS WELL AS OF THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FO R EARLIER ASSESSMENT YEARS, WE FIND THAT WHETHER THE ASSESSEES RECEIPT FROM HO TEL BUSINESS IS TO BE ASSESSED AS BUSINESS INCOME OR INCOME FROM HOUSE PR OPERTY HAS BEEN SETTLED IN ITA NO.5313/M/2014 & CO NO.11/M/2016 M/S. PLAZA HOTELS PVT. LTD. 3 FAVOUR OF THE ASSESSEE BY CONSISTING FINDING OF THE TRIBUNAL IN THE EARLIER ASSESSMENT YEARS. FOR THE SAKE OF COMPLETENESS, TH E RELEVANT PART OF THE ORDER OF THE TRIBUNAL DATED 13.09.13 PASSED IN ITA NOS.66 76/M/2011 AND ITA NO.6636/M/2011 (A.Y. 2006-07) IS REPRODUCED AS UNDE R: 14. AFTER CONSIDERING THE SUBMISSION AND PERUSING THE MATERIAL ON RECORD, WE ARE OF THE VIEW THAT THERE IS NO DISPUTE THAT THE ASSES SEE WAS RUNNING THE HOTEL ITSELF BEFORE GIVING TO KHIL UNDER AGREEMENT ENTERED IN TH E YEAR OF 1994. THE ENTIRE ACTIVITIES OF HOTEL CARRIED OUT BY THE ASSESSEE ITS ELF BEFORE ENTERING THE AGREEMENT WAS GIVEN TO KHIL. AN INTEREST FREE SECURITY WAS AL SO OBTAINED FROM KHIL, WHICH WAS REFUNDABLE AFTER COMPLETION OF PERIOD ENTERED INTO BETWEEN THE PARTIES. THE ASSESSEE WAS SHARING A REVENUE AT THE RATE OF 1% OF THE REVENUE EARNED BY THE KHIL ON ACCOUNT OF RUNNING OF HOTEL OWNED BY THE ASSESSE E. THOUGH THE CIT(A) HAS RECORDED THE FACTS IN HIS ORDER THAT M/S KHIL WAS A LLOWED TO RENOVATE THE HOTEL OR RECONSTRUCT THE SAME FROM HIS OWN FUNDS, BUT IT DOE S NOT MEAN THAT THE CHARACTER OF ASSET OWNED BY THE ASSESSEE HAS BEEN CHANGED. TH E FACT IS THAT THE ASSESSEE OWNED HOTEL, WHICH WAS RUN BY THE ASSESSEE BEFORE E NTERING INTO THE AGREEMENT. WHATEVER THE REQUIREMENT OF THE HOTEL WAS THERE, TH E SAME WAS MADE BY KHIL WITH ITS OWN FUND AS AGREED UPON. THE CHARACTER OF THE A SSET WAS THAT THE ENTIRE HOTEL WHICH WAS RUN BY THE ASSESSEE ITSELF EARLIER WAS GI VEN UNDER THE AGREEMENT TO M/S KHIL TO RUN THE HOTEL. THEREFORE, IN OUR CONSIDERED VIEW, THIS WAS AN EXPLOITATION OF COMMERCIAL ASSET FOR BUSINESS PURPOSE AND WHATEVER THE RECEIPTS ARE RECEIVED FROM EXPLOITING OF COMMERCIAL ASSET FOR BUSINESS USE ARE TO BE TREATED AS BUSINESS RECEIPTS. WHEN THE ASSESSEE WAS RUNNING THIS HOTEL, THE RECEIPTS FROM THE HOTEL WERE SHOWN AS BUSINESS RECEIPTS AND THEY WERE ACCEP TED. AFTER GIVING TO KHIL I.E. IN THE YEAR 1994, THE RETURN WAS FILED FOR ASSESSMENT YEAR 1995-96 SHOWING THE REVENUE RECEIPT FROM KHIL AS BUSINESS INCOME AND TH E SAME WAS ACCEPTED. THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3). UP T O ASSESSMENT YEAR 2005-06, THE ASSESSMENT HAS BEEN COMPLETED BY THE AO AND THE CONTENTION OF THE ASSESSEE THAT THE REVENUE RECEIVED FROM KHIL ARE BUSINESS AS SET, WERE ACCEPTED. FOR ASSESSMENT YEAR 2005-06 & 2003-04 THE ASSESSMENT WA S COMPLETED UNDER SECTION 143(3). THE MATTER REACHED TO THE STAGE OF THE TRIB UNAL, HOWEVER, THIS ISSUE WAS NEVER DISPUTED BY THE AO THAT THE REVENUE RECEIPT R ECEIVED FROM M/S KHIL UNDER THE AGREEMENT ARE BUSINESS RECEIPT AS THEY WERE ACC EPTED. THEREFORE, IT CANNOT BE SAID THAT ANY CHARACTER OF THE REVENUE RECEIPT HAS BEEN CHANGED IN THE YEAR UNDER CONSIDERATION. IN OUR CONSIDERED VIEW, THE PRINCIPL E OF CONSISTENCY IN THE CASE IN HAND IS APPLICABLE. ACCORDINGLY, THE AO SHOULD HAVE ACCEPTED THE RECEIPT UNDER THE HEAD BUSINESS INCOME SHOWN BY THE ASSESSEE. 14.1 THE AO HAS PLACED RELIANCE ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF SHAMBHU INVESTMENTS (SUPRA), WHICH HAS BEEN CONSIDERED BY THE LEARNED CIT(A) ALSO. HOWEVER, WE NOTED THAT IN THE CASE OF SHAMBHU INVESTMENTS (SUPRA), THE HONBLE APEX COURT HAS OBSERVED THAT, IF THE ASSESSEE HAS GIVEN ANY ASSET EXPLOITING THE PROPERTY FOR COMMERCIAL PURPOS E, THEN THE SAME HAS TO BE TREATED AS BUSINESS INCOME. THE FOLLOWING OBSERVATI ONS HAVE BEEN MADE BY THE HONBLE SUPREME COURT IN THE CASE OF SHAMBHU INVEST MENTS (SUPRA):- ITA NO.5313/M/2014 & CO NO.11/M/2016 M/S. PLAZA HOTELS PVT. LTD. 4 'TAKING A SUM TOTAL OF AFORESAID DISCUSSIONS, IT CL EARLY APPEARS THAT MERELY BECAUSE INCOME IS ATTACHED TO ANY IMMOVABLE PROPER TY CANNOT BE THE SOLE FACTOR FOR ASSESSMENT OF SUCH INCOME AS IN COME FROM PROPERTY; WHAT HAS TO BE SEEN IS WHAT WAS THE PRIMARY OBJECT OF THE ASSESSEE WHILE EXPLOITING THE PROPERTY. IF IT IS FOUND, APPLYING S UCH TEST, THAT MAIN INTENTION IS FOR LETTING OUT THE PROPERTY, OR ANY PART THEREO F, THE SAME MUST BE CONSIDERED AS RENTAL INCOME OR INCOME FROM PROPERTY . IN CASE, IT IS FOUND THAT THE MAIN INTENTION IS TO EXPLOIT THE IMMOVABLE PROPERTY BY WAY OF COMPLEX COMMERCIAL ACTIVITIES, IN THAT EVENT, IT MU ST BE HELD AS BUSINESS INCOME.' IN THIS CASE THE HONBLE SUPREME COURT HAS HELD THA T IF IT IS FOUND THAT THE MAIN INTENTION IS FOR LETTING OUT THE PROPERTY OR ANY PA RT THEREOF, THE SAME MUST BE CONSIDERED AS RENTAL INCOME OR INCOME FROM PROPERTY . IN THIS CASE IT IS OBSERVED THAT IF THE MAIN INTENTION IS TO EXPLOIT THE IMMOVA BLE PROPERTY BY WAY OF COMPLEX COMMERCIAL ACTIVITIES, IT MUST BE HELD AS BUSINESS INCOME. THE RATIO OF THIS DECISION, IN OUR CONSIDERED VIEW, IS APPLICABLE IN THE PRESEN T FACTS OF THE CASE AS THE ASSESSEE HAS GIVEN THE PROPERTY FOR EXPLOITING BY WAY OF COM PLEX COMMERCIAL ACTIVITIES IN THE YEAR OF 1994 AND FROM ASSESSMENT YEAR 1995-96 TO 20 05-06, THE DEPARTMENT HAS ACCEPTED THE CONTENTION OF THE ASSESSEE HOLDING THA T THE RECEIPT ON ACCOUNT OF LEASING TO KHIL ARE BUSINESS RECEIPT. 14.2 THIS IS ALSO A MATTER OF FACT THAT THERE WAS N O FIXED RATE AS THE ASSESSEE WAS EARNING/RECEIVING ONLY 1% OF THE GROSS REVENUE RECE IPTS. FROM THIS FACT, IT IS AMPLY PROVED THAT THE COMMERCIAL ASSET WAS USED BY THE AS SESSEE, AND, THEREFORE, ANY COMMERCIAL RECEIPT HAS TO BE TREATED AS BUSINESS RE CEIPT. IT IS FURTHER SEEN THAT AS PER AGREEMENT ENTERED INTO BETWEEN THE ASSESSEE AND M/S KHIL, THE HOTEL PREMISES WILL BE HANDED OVER TO THE ASSESSEE AND TH E ASSESSEE IS LIABLE TO PAY ALL THE EXPENDITURES INCURRED BY M/S KHIL ON ITS CONSTR UCTION AND RENOVATION AS PER FORMULA AGREED UPON. IT IS ALSO A MATTER OF FACT TH AT THE ASSESSEE WAS RUNNING THIS HOTEL ITSELF AND THE ASSESSEE IS ALSO RUNNING VARIO US OTHER HOTELS AT PRESENT. 14.3 IN CASE OF CIT VS. MOHIDDIN HOTELS P. LTD., RE PORTED IN 284 ITR 229, SIMILAR FACTS WERE INVOLVED. IN THIS CASE ALSO THE HOTEL WAS GIVE N ON LEASE TO A THIRD PARTY. THE AO TREATED THE LEASE INCOME AS INCOME FROM HOUSE PROPE RTY AGAINST SHOWN BY THE ASSESSEE AS BUSINESS RECEIPT. THE TRIBUNAL ALLOWED THE ISSUE IN FAVOUR OF THE ASSESSEE. ON APPEAL BEFORE THE HIGH COURT, THE HON BLE HIGH COURT IN THE AFORESAID CASE CONFIRMED THE ORDER OF THE TRIBUNAL BY HOLDING AS UNDER :- 'HELD, THAT FROM THE FACTS FOUND BY THE TRIBUNAL AS WELL AS THE AGREEMENT DATED FEBRUARY 1, 1987, IT WAS MORE THAN CLEAR THAT THE AGREEMENT BETWEEN THE ASSESSEE AND S RELATED TO THE BUILDING THAT WAS READY FOR THE PURPOSES OF COMMENCING THE HOTEL BUSINESS. THE AGREEMENT DID NO T RELATE TO A BARE TENEMENT BUT WAS IN RESPECT OF THE HOTEL. THAT THE SAID HOTEL WAS COMPLETE WITH FITTINGS AND FIXTURES AND READY FOR COMMENCING THE BUSINESS WAS APPARENT FROM THE AGREEMENT. THE FACT THAT ALL LICE NCES, PERMISSIONS AND NO OBJECTION CERTIFICATES REQUIRED FOR RUNNING HOTEL W ERE TO BE OBTAINED IN THE NAME OF THE ASSESSEE WAS A POINTER TO THE ASPECT TH AT THE ASSESSEE INTENDED ITA NO.5313/M/2014 & CO NO.11/M/2016 M/S. PLAZA HOTELS PVT. LTD. 5 TO EXPLOIT THE BUSINESS ASSET (THE HOTEL). THE INCO ME OF RS. 7,80,000 RECEIVED FROM S IN THE HANDS OF THE ASSESSEE WAS IN COME FROM BUSINESS UNDER SECTION 28 OF THE INCOME-TAX ACT, 1961.' WHILE HOLDING SO, THE HONBLE HIGH COURT HAS REFERR ED TO THE CASES VIZ., CEPT VS. SHRI LAKSHMI SILK MILLS LTD., 20 ITR 451 (SC), CIT VS. CALCUTTA NATIONAL BANK LTD., 37 ITR 171 (SC), CIT VS. VIKRAM COTTON MILLS LTD., 169 ITR 597 (SC), SULTAN BROTHERS P. LTD. VS. CIT, REPORTED IN 51 ITR 353 (SC) AND IN CA SE OF UNIVERSAL PLAST LTD. VS. CIT, 237 ITR 454 (SC). AFTER CONSIDERING VARIOUS DECISIO NS AS MENTIONED ABOVE, THE HONBLE HIGH COURT HAS HELD THAT THE ASSESSEE HAS G IVEN HOTEL ON LEASE FOR EXPLOITING BUSINESS ASSET AND, THEREFORE, THE TRIBU NAL WAS CORRECT IN HOLDING THAT THE INCOME FROM LEASING THE HOTEL WAS INCOME FROM B USINESS. FACTS OF THE CASE IN HAND ARE SIMILAR TO THE FACTS BEFORE THE HONBLE HI GH COURT IN CASE OF MOHIDDIN HOTELS PVT. LTD. (SUPRA). THEREFORE, FOR THIS REASO N ALSO, WE ARE OF THE VIEW THAT THE RECEIPT FROM M/S KHIL ON ACCOUNT OF LEASING THE HOT EL WAS BUSINESS RECEIPT. THERE IS NO DISPUTE THAT THE ASSESSEE IS OWNER OF THE HOTEL GIVEN ON LEASE TO M/S KHIL. ALL THE LICENSES AND PERMISSIONS ARE IN THE NAME OF ASS ESSEE. THIS IS ALSO A FACT THAT THE ASSESSEE WAS RUNNING ITS HOTEL ITSELF BEFORE GIVING TO M/S KHIL. ACCORDINGLY, IN OUR CONSIDERED VIEW, THE RECEIPTS RECEIVED FROM KHIL AR E BUSINESS RECEIPT. THEREFORE, WE ALLOW THIS GROUND OF THE ASSESSEE AND DIRECT THE AO TO TREAT THE BUSINESS RECEIPT AGAINST INCOME FROM PROPERTY TREATED BY HIM. THE ABOVE FINDING OF THE TRIBUNAL HAS BEEN SUBSEQUE NTLY FOLLOWED VIDE ORDER DATED 25.07.14 IN ITA NOS.2828 & 2829/M/2012 FOR A.Y. 2007-08 AND ITA NOS.3191 & 3192/M/2012 FOR A.Y. 2008-09 AND FU RTHER IN ASSESSMENT YEAR 2009-10 IN ITA NOS.5855/M/2013 AND 5950/M/2013 VIDE ORDER DATED 31.08.15 AND THEREAFTER IN THE A.Y. 2010-11 VIDE IT A NO.4606/M/2014 VIDE ORDER DATED 12.01.16. 6. AS REGARDS GROUND NO.2, IN VIEW OF OUR FINDINGS GIVEN ABOVE IN GROUND NO.1, GROUND NO.2 WOULD BECOME INFRUCTUOUS AND THE SAME IS ACCORDINGLY DISMISSED. 7. NOW COMING TO THE ASSESSEES CROSS APPEAL I.E. C O NO.11/M/2016. CO NO.11/M/2016 8. THE ASSESSEE HAS AGITATED THE CONFIRMATION OF RS .17,78,303/- MADE BY THE ASSESSING OFFICER (HEREINAFTER REFERRED TO AS T HE AO) UNDER SECTION 14A OF THE INCOME TAX ACT READ WITH RULE 8D OF THE IT RULE S. AT THE OUTSET, THE LD. ITA NO.5313/M/2014 & CO NO.11/M/2016 M/S. PLAZA HOTELS PVT. LTD. 6 A.R. OF THE ASSESSEE HAS STATED THAT INITIALLY THE ASSESSEE HAD SUO-MOTO DISALLOWED RS.17,78,303/- ON ACCOUNT OF EXPENDITURE INCURRED FOR EARNING OF EXEMPT INCOME UNDER SECTION 14A READ WITH RULE 8D. HOWEVER, DURING THE ASSESSMENT PROCEEDINGS BEFORE THE AO, THE ASSESSEE CLAIMED THAT THE AFORESAID DISALLOWANCE WAS INADVERTENTLY DONE AND THAT THE CO RRECT DISALLOWANCE SHOULD BE MADE AFTER EXCLUDING THE VALUE OF INVESTMENTS IN GROUP COMPANIES WHICH WERE STRATEGIC INVESTMENTS MADE FOR THE PURPOSE OF HOLDING CONTROLLING INTEREST AND WERE PASSIVE IN NATURE. THE LD. A.R., IN THIS RESPECT, HAS RELIED UPON THE DECISION OF THE CO-ORDINATE BENCH OF THE TRIBUNAL I N THE CASE OF GARWARE WALL ROBES LTD. VS. ADDITIONAL CIT IN ITA NO.5408/M/09 VIDE ORDER DATED 15.01.14. THE AO, HOWEVER, REJECTED THE CLAIM OF T HE ASSESSEE ON THE GROUND THAT THE CLAIM WAS NOT PUT BY WAY OF REVISED RETURN AND THAT THE DECISION OF THE TRIBUNAL IN THE CASE OF GARWARE WALL ROBES LTD. ( SUPRA) HAS NOT BEEN ACCEPTED BY THE DEPARTMENT AS DEPARTMENT HAS FILED AN APPEAL BEFORE THE HONBLE BOMBAY HIGH COURT AGAINST THE SAID DECISION . 9. THE LD. CIT(A) ALSO CONFIRMED THE SAID FINDING O F THE AO. 10. BEFORE US, THE LD. A.R. OF THE ASSESSEE HAS REL IED UPON THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT V S. PRUTHVI BROKERS AND SHAREHOLDERS PVT. LTD. (2012) 349 ITR 336 (BOM.) W HEREIN THE HONBLE BOMBAY HIGH COURT, WHILE RELYING UPON THE VARIOUS D ECISIONS OF THE HONBLE SUPREME COURT AND OTHER HONBLE HIGH COURTS, HAS HE LD THAT EVEN IF A CLAIM IS NOT MADE BEFORE THE AO IT CAN BE MADE BEFORE THE AP PELLATE AUTHORITIES. THE JURISDICTION OF THE APPELLATE AUTHORITIES TO ENTERT AIN SUCH A CLAIM IS NOT BARRED. AN ASSESSEE IS ENTITLED TO RAISE NOT MERELY ADDITIO NAL LEGAL SUBMISSIONS BEFORE THE APPELLATE AUTHORITIES BUT IS ALSO ENTITLED TO R AISE ADDITIONAL CLAIMS BEFORE THEM. THE APPELLATE AUTHORITIES HAVE THE DISCRETIO N WHETHER OR NOT TO PERMIT SUCH ADDITIONAL CLAIMS TO BE RAISED. IT CANNOT, HO WEVER, BE SAID THAT THEY HAVE NO JURISDICTION TO CONSIDER THE SAME. THE APPELLAT E AUTHORITIES HAVE JURISDICTION TO DEAL NOT MERELY WITH ADDITIONAL GRO UNDS WHICH BECAME AVAILABLE ITA NO.5313/M/2014 & CO NO.11/M/2016 M/S. PLAZA HOTELS PVT. LTD. 7 ON ACCOUNT OF CHANGE OF CIRCUMSTANCES OR LAW, BUT W ITH ADDITIONAL GROUNDS WHICH WERE AVAILABLE WHEN THE RETURN WAS FILED BUT COULD NOT HAVE BEEN RAISED AT THAT STAGE OR THE GROUNDS WHICH BECAME AVAILABLE ON ACCOUNT OF CHANGE OF CIRCUMSTANCES OR LAW. THE WORDS COULD NOT HAVE BE EN RAISED MUST BE CONSTRUED LIBERALLY AND NOT STRICTLY. IT IS OPEN T O THE ASSESSEE TO CLAIM A DEDUCTION BEFORE THE APPELLATE AUTHORITY WHICH COUL D NOT HAVE BEEN CLAIMED BEFORE THE AO. THE HONBLE BOMBAY HIGH COURT HAS F URTHER OBSERVED THAT THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF G OETZE (INDIA) LIMITED V. CIT (2006) 157 TAXMAN 1, REGARDING THE RESTRICTION OF MAKING THE CLAIM THROUGH A REVISED RETURN WAS LIMITED TO THE POWERS OF THE ASSESSING AUTHORITY AND THE SAID JUDGMENT DOES NOT IMPINGE ON THE POWER OR NEGATE THE POWERS OF THE APPELLATE AUTHORITIES TO ENTERTAIN SUCH CLAIM B Y WAY OF ADDITIONAL GROUND. IN VIEW OF THE ABOVE DECISION OF THE JURISDICTIONAL HI GH COURT, WE HOLD THAT THE ASSESSEES CLAIM MADE IN RESPECT OF THE ABOVE ISSUE CAN BE LOOKED INTO AT THIS STAGE. MOREOVER THE DEPARTMENT IS EXPECTED TO COLLE CT LEGITIMATE TAXES FROM THE TAX PAYERS. IF THE ASSESSEE IS ENTITLED TO A DEDUCT ION AS PER THE LAW, THEN THE SAME SHOULD NOT BE DENIED TO HIM MERELY FOR THE SAK E OF TECHNICALITIES. 12. SO FAR AS THE ISSUE ON MERITS RELATING TO STRAT EGIC INVESTMENTS IN GROUP COMPANIES FOR THE PURPOSE OF HAVING CONTROL OVER TH EM IS CONCERNED, THE LD. A.R. HAS INVITED OUR ATTENTION TO THE DECISION OF T HE TRIBUNAL IN THE EARLIER ASSESSMENT YEARS WHEREIN SIMILAR ISSUE HAD COME UP BEFORE THE TRIBUNAL FOR A.Y. 2006-07 AS WELL AS IN A.Y. 2007-08 VIDE ORDERS DATED 13.09.13 (SUPRA) AND 25.07.14 (SUPRA). THE LD. A.R. HAS ALSO REITER ATED THE RELIANCE ON THE JUDGMENT IN THE CASE OF GARWARE WALL ROBES LTD. ( SUPRA) TO STATE THAT THE DISALLOWANCE UNDER SECTION 14A IS NOT ATTRACTED IN CASE OF STRATEGIC INVESTMENTS MADE IN GROUP COMPANIES WHICH ARE MADE NOT FOR THE PURPOSE OF EARNING OF ANY DIVIDEND INCOME. WE FIND THAT IN EARLIER ASSES SMENT YEAR 2006-07, 2007- 08, 2008-09 & 2009-10 IN THE OWN CASE OF THE ASSES SEE, THE ISSUE HAS BEEN RESTORED TO THE FILE OF THE AO FOR A DECISION AFRES H IN THE LIGHT OF THE DECISIONS REFERRED TO ABOVE. FOR THE SAKE OF CONSISTENCY FOL LOWING THE SAME LINE, WE ITA NO.5313/M/2014 & CO NO.11/M/2016 M/S. PLAZA HOTELS PVT. LTD. 8 RESTORE THIS ISSUE TO THE FILE OF THE AO TO DECIDE IT AFRESH AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF HEARING IN THIS RESPECT. WE MAKE IT CLEAR THAT SO FAR AS THE GROUND THAT SUCH A CLAIM WAS NOT MADE BY THE ASSESSEE IN THE RETURN OF INCOME, THE SAID ISSUE HAS BEEN DECIDED BY US IN FA VOUR OF THE ASSESSEE IN VIEW OF OUR FINDINGS GIVEN ABOVE. THE AO, THEREFORE, IS DIRECTED TO CONSIDER THE CLAIM OF THE ASSESSEE ON MERITS AND AS PER THE DIRE CTIONS OF THE TRIBUNAL GIVEN IN EARLIER ASSESSMENT YEARS (SUPRA) ON THE IDENTICA L ISSUE. THE CROSS OBJECTION OF THE ASSESSEE IS THEREFORE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 14. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED AND THE CROSS APPEAL OF THE ASSESSEE IS HEREBY ALLOWED FOR STATISTICAL P URPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 09.03.2016. SD/- SD/- (RAJESH KUMAR) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 07.04.2016. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.