ACIT, New Delhi V. M/s. ELEL Hotels & Investment Ltd., Mumbai

ITA 1080/DEL/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 6699 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 5 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 02-05-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 25-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MANOJ KR CHOPRA
• Keywords: Capital asset; Business expenditure; Revised return
• Section: 143(3); 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: B NEW DELHI BEFORE SMT DIVA SINGH, JUDICIAL MEMBER AND SH.L.P.SAHU, ACCOUNTANT MEMBER I.T.A .NO.-1080/DE L/2014 (ASSESSMENT YEAR-2008-09) ACIT, CIRCLE-13, NEW DELHI (APPELLANT) VS ELEL HOTELS & INVESTMENT LTD., HOTEL SEA ROCK, BANK STAND, B.J.ROAD, BANDRA (W), MUMBAI PAN-AAACE2846 (RESPONDENT) A SSESSEE BY SH. MANOJ KR. CHOPRA, SR.DR R EVENUE BY SH. AJAY WADHWA, ADV. ORDER PER DIVA SINGH, JM THE PRESENT APPEAL HAS BEEN FILED BY THE REVENUE AS SAILING THE CORRECTNESS OF THE ORDER DATED 19.12.2013 OF CIT(A)-1, NEW DELH I PERTAINING TO 2008 09 ASSESSMENT YEAR ON THE FOLLOWING GROUNDS:- 1. THE ORDER OF LD.CIT(A) IS NOT CORRECT IN LAW AND F ACTS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD.C IT(A) HAS ERRED IN DELETING THE ADDITION OF RS.53,31,894/- MADE BY AO ON ACCOUNT DISALLOWANCE OF EXPENSES WITHOUT APPRECIATING THE E SSENTIAL FEATURE THAT THE EXPENSES SHOULD NOT ONLY BE INCIDENTAL OR NECESSARY, BUT IT SHOULD BE WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS, HAS NOT BEEN SATISFACTORY BROUGHT OUT BY THE ASSESSEE. 3. THE APPELLANT CRAVES LEAVE TO ADD, AMEND ANY/ALL TH E GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF HEARING OF TH E APPEAL. 2. THE RELEVANT FACTS AS BORNE OUT FROM THE RECORD ARE THAT THE ASSESSEE IN THE YEAR UNDER CONSIDERATION DECLARED A TOTAL LOSS OF R S.11,03,49,616/- ON DATE OF HEARING 05.05.2016 DATE OF PRONOUNCEMENT 29.07.2016 I.T.A .NO.-1080/DEL/2014 PAGE 2 OF 10 30.09.2008. THE ASSESSEE REVISED THE SAID RETURN ON 04.05.2009 DECLARING A LOSS OF RS.1,09,60,211/-. DURING THE SCRUTINY PROCEEDIN GS, THE ASSESSEE WAS REQUIRED TO FURNISH REASONS FOR REVISING THE RETURN. CONSI DERING THE SAME, THE AO OBSERVED THAT IN THE REVISED RETURN THE ASSESSEE TH OUGH HAS VOLUNTARILY DISALLOWED CERTAIN EXPENSES CLAIMED IN THE RETURN OF INCOME FI LED ON 30.09.2008 HOWEVER, AT THE SAME TIME NEW EXPENSES TO THE EXTENT OF RS.63,8 9,741/- HAD BEEN CLAIMED. REFERRING TO THE PROFIT AND LOSS ACCOUNT AND BALANC E SHEET FILED ALONGWITH THE RETURN IT WAS OBSERVED THAT THESE EXPENSES HAD BEEN CONSIDERED AS CAPITAL WORK IN PROGRESS AND HAD NOT BEEN CHARGED AS EXPENSES. THE ASSESSEE ACCORDINGLY WAS REQUIRED TO SUBMIT AN EXPLANATION FOR ALLOWABILITY OF THESE EXPENSES. THE ASSESSEE EXPLAINED THAT THESE EXPENSES WERE INCURRED FOR MAI NTAINING ITS CORPORATE STRUCTURE, EXISTENCE AND PRESERVING THE ASSETS-INFR ASTRUCTURE. IT WAS EXPLAINED THAT THE ASSESSEE HAD MAINTAINED ALL LICENSES ETC F OR THE OPERATION OF A HOTEL. REFERRING TO THE CHART CONTAINING THE DETAILS OF EX PENSES IT WAS SUBMITTED THAT THE DESCRIPTION OF EXPENSES ITSELF WOULD SHOW THAT THES E WERE BONA FIDE, LARGELY GOVERNMENT DUES. RELIANCE WAS PLACED ON CIT V.RAM PUR TIMBER COMPANY LTD. 129 ITR 58 ALLAHABAD; NOKODAR BUS SERVICES PVT. LT D., 179 ITR 506 (PUNJ); CHENNAI & CO. PVT. LTD. V. CIT 206 ITR 616 (BOM); HINDUSTAN CHEMICALS WORKS LTD. V. CIT, 124 ITR 561; BIRLA COTTON SPINNING AND WEAVING MILLS LTD. V. CIT 64 ITR 568, 584 (CAL.) AND AFFIRMED BY THE HON'BLE SUP REME COURT AS REPORTED IN 82 ITR 166. 2.1. THE FOLLOWING DETAILS IN RESPECT OF THE EXPENS ES CLAIMED WERE FILED BY WAY OF A CHART VIDE LETTER DATED 15.11.2010:- I.T.A .NO.-1080/DEL/2014 PAGE 3 OF 10 1. THE ASSESSEE COMPANY DURING THE YEAR UNDER ASSE SSMENT', IN THE COMPUTATION OF INCOME HAS CLAIMED DEDUCTION OF EXPENSES DETAILED AS UNDER-DEBITED TO CAPITAL WORK IN PROGRE SS IN THE BALANCE SHEET:- S.NO. PARTICULARS AMOUNT (RS.) 1. WATER EXPENSES 1,02,822/- 2. SECURITY CHARGES 13,89,560/- 3. GOVERNMENT DUES (A) DUTIES & TAXES 14,500/- (B) INSURANCE OF ASSETS 36,724/- (C) LICENSE FEES 445,790/- (D) MVAT 560,833/- 4. SALARY-ACCOUNTANT RANJEET 641,433/- 5. OFFICE BOY 64,000/- 6. ELECTRICITY EXPENSES 31,34,079/- TOTAL 63,89,741/- 3. CONSIDERING THE FACT THAT THE ASSESSEE HAD NO IN COME FROM THE OPERATION OF HOTEL BUSINESS AND THE INCOME SHOWN UNDER THE HEAD OTHER INCOME WAS MERELY A PASSIVE DIVIDEND INCOME, PROVISIONS WRITTEN BACK AN D INSURANCE CLAIMS ETC. AND THE EXPENSES CLAIMED AS REVENUE EXPENSES HAD BEEN S HOWN BY THE AUDITORS AS CAPITAL WORKS PROGRESS, THE AO RELYING ON POSITION ON THESE FACTS TAKEN NOTE OF BY ORDER DATED 31.12.2008 BY ORDER U/S 153A R.W.S. 143 (3) AS AVAILABLE IN THE CASE OF THE ASSESSEE IN 200506 ASSESSMENT YEAR WAS OF THE VIEW THAT ONLY THE GOVERNMENT DUES ARE THE MINIMUM STATUTORY EXPENSES THAT HAVE TO BE INCURRED FOR KEEPING THE COMPANY IN EXISTENCE COULD BE ALLOW ED. THE POSITION AS CONSIDERED IN 2005-06 AY IS EXTRACTED BY THE AO IN THE PRESENT PROCEEDINGS AND REPRODUCED HEREUNDER FOR READY-REFERENCE:- 2.5. A SIMILAR SITUATION WAS OBSERVED IN THE CASE OF THE ASSESSEE COMPANY FOR THE ASSESSMENT YEAR 2005-06. IN THIS CO NTEXT, IT IS RELEVANT TO NOTE THE OBSERVATION OF THE ASSESSING OFFICER IN THE ORDER DATED 31.12.2008 FOR THE PROCEEDINGS U/S 153A R.W.S 143(3 ) AS REPRODUCED BELOW: - 'AS EXTRACTED ABOVE, THE ASSESSEE HAS FURNISHED HEA D-WISE DETAILS OF THE REVENUE EXPENSES CLAIMED BY IT AGAIN ST THE ONLY MAIN RECEIPT OF INTEREST ON INCOME TAX REFUND. I H AVE GONE THROUGH THE SAID CONTENTIONS AND EXPLANATIONS. AS F OUND EARLIER, I.T.A .NO.-1080/DEL/2014 PAGE 4 OF 10 THESE CLAIMS ARE MADE BY THE ASSESSEE AT A TIME WHE N THE ENTIRE BUSINESS EMPIRE HAS TUMBLED DOWN LONG BACK A ND NO ACTIVITY EXCEPT VARIOUS LITIGATIONS AS MENTIONED, H AVE BEEN GOING ON. WITH THE CHANGE IN THE CONTROL OF THE AFFAIRS N OW, THE QUESTION THAT REMAINS UNEXPLAINED IS WHETHER HE CHA NGE OVER WAS BUSINESS OF THE ASSESSEE IN ITS OLD GARB OF MAN AGEMENT OR WHETHER THE SPOILS OF THE PAST HAS ANYTHING TO DO W ITH THE FUTURISTIC ADVENTURES OF THE NEW CONTROLLING SEGMEN T. THE ESSENTIAL FEATURE THAT THE EXPENSES SHOULD NOT ONLY BE INCIDENTAL OR NECESSARY, BUT IT SHOULD BE 'WHOLLY, AND EXCLUSI VELY' FOR THE PURPOSE OF BUSINESS, HAS NOT BEEN SATISFACTORILY BR OUGHT OUT BY THE ASSESSEE AFTER HAVING SPENT SO MANY WORDS AS QU OTED ABOVE. THEREFORE, ONLY THE FOLLOWING EXPENSES ARE ALLOWED:- AUDITORS REMUNERATION OF RS.11,000/- BANK CHARGES OF RS.19,461/-, INSURANCE EXPENSES OF RS.12,445/- AND PROFESSIONAL TAX OF RS.12,600/- REST OF OTHER EXPENSES CLAIMED BY THE ASSESSEE COMP ANY, ARE DISALLOWED. ' 3.1. AS A RESULT OF THIS REASONING, THE FOLLOWING E XPENSES WERE ALLOWED AND ADDITION OF RS.53,31,894/- WAS MADE BY WAY OF A DIS ALLOWANCE TREATING THESE AS WORK IN PROGRESS:- S.NO. PARTICULARS AMOUNT(RS.) 3. GOVERNMENT DUES (A) DUTIES & TAXES 14,500/- (B) INSURANCE OF ASSETS 36,724/- (C) LICENSE FEES 4,45,790/- (D) MVAT 5,60,833/- TOTAL RS.10,57,847/- 4. THE ASSESSEE CARRIED THE ISSUE IN APPEAL BEFORE THE CIT(A). RELYING ON SHINGAR LAMPS LTD. VS ACIT [2006] 150 TAXMAN 17 (AS R) (MAG); K.N.P. SECURITIES P. LTD. [2010] 1 ITR 130 (MUM); CIT VS ANITA JAIN [ 2009] 182 TAXMAN 173 (DELHI); URBAN MASS TRANSIT CO.LTD. VS ACIT [2013] 39 TAXMAN N.COM 121 (DEL.); CIT VS RAMPUT TIMBER COMPANY LTD. 129 ITR 58 (ALL.); NAKOD AR BUS SERVICES PVT.LTD. 179 ITR 506 (PUN.); CHENNAI & CO.PVT.LTD. VS CIT 20 6 ITR 616 (BOM.); HINDUSTAN I.T.A .NO.-1080/DEL/2014 PAGE 5 OF 10 CHEMICALS WORKS LTD. VS CIT 124 ITR 561; BIRLA COTT ON SPINNING & WEAVING MILLS LTD. VS CIT 64 ITR 568, 584 (CAL.). 4.1. IT WAS ARGUED THAT THE AO HAS MERELY ALLOWED T HE GOVERNMENT DUES AND HAS DISALLOWED THE REMAINING CLAIM OF EXPENSES RELATING TO SECURITY CHARGES, ELECTRICITY, WATER CHARGES AND SALARY TO ONE ACCOUNTANT AND ONE OFFICE BOY. 4.2. CONSIDERING THE SUBMISSIONS, THE CIT(A) CAME T O THE FOLLOWING CONCLUSION:- 3.2. I HAVE CONSIDERED THE ASSESSMENT ORDER, THE SUBMIS SIONS MADE AND THE DOCUMENTS FILED BEFORE ME. THE APPELLANT CO MPANY DOES NOT HAVE ANY INCOME UNDER THE HEAD BUSINESS. IN THE COM PUTATION OF INCOME FILED WITH THE REVISED RETURN, THE APPELLANT HAS ADDED BACK EXPENSES / DISALLOWANCES TO THE TUNE OF RS.9,92,57, 354/- AND CLAIMED EXPENSES TO THE TUNE OF RS.3,68,02,016/- RESULTING IN NET LOSS OF RS.1,09,60,211/- UNDER THE HEAD 'INCOME FROM BUSINE SS'. THE AMOUNT OF EXPENSES CLAIMED IN THE REVISED RETURN INCLUDE R S.63,89,741/- WHICH IS IN DISPUTE IN THE PRESENT APPEAL. THE REVENUE IS OF THE OPINION THAT ONLY GOVERNMENT DUES ARE REQUIRED TO BE PAID FOR PR ESERVING THE CORPORATE STATUS OF THE APPELLANT. HOWEVER, I FIND THAT EXPENSES ON THE SECURITY OF THE PROPERTY OF THE COMPANY, SALARY TO AN ACCOUNTANT WHO IS TO MAINTAIN THE DAY-TO-DAY ACCOUNTS, RECORDS AND BO OKS OF THE APPELLANT, SALARY TO AN OFFICE BOY WHO IS REQUIRED TO DO ALL MENIAL WORK AND ERRANDS RELATING TO THE COMPANY - EVEN DEPOSITI NG THE SAID GOVERNMENT DUES, WATER AND ELECTRICITY THAT ARE ESS ENTIAL FOR PRESERVING AND MAINTAINING THE HOTEL PROPERTY OWNED BY THE APP ELLANT COMPANY ARE ALSO BARE MINIMUM EXPENSES REQUIRED FOR MAINTAI NING THE COMPANY AND ITS ASSETS. IT WAS HELD IN BIRLA COTTON SPINNIN G & WEAVING MILLS LTD. VS. CIT [64 ITR 568, 584 (CAL.)] THAT BUSINESS INCLUDES DAY-TO- DAY RUNNING OF THE BUSINESS, PRESERVATION OF BUSINESS A ND PROTECTION OF ITS ASSETS AND PROPERTY FROM EXPROPRIATION, COERCIVE PR OCESS OR HOSTILE TITLE, PAYMENT OF STATUTORY DUES AND TAXES AND THINGS INCI DENTAL TO CARRYING ON BUSINESS AND EXPENSES RELATING THERETO WERE ALLO WABLE BUSINESS EXPENSES. THIS RULING WAS AFFIRMED BY THE HON'BLE S UPREME COURT [82 ITR 166]. I AM ALSO OF THE VIEW THAT EXPENSES ON SE CURITY, ELECTRICITY AND WATER ARE OUTRIGHT CONSUMABLES AND CANNOT BE CA PITALIZED AS THESE EXPENSES DO NOT ADD ANY VALUE TO THE CAPITAL ASSET. MOREOVER, THE LOSS RETURNED BY THE APPELLANT WAS REDUCED FROM RS.8,60, 18,830/- FILED IN THE ORIGINAL RETURN TO RS. 1,09,60,211/- IN THE REV ISED RETURN AND AS SUCH THE CLAIM OF THE EXPENSES MADE BY THE APPELLAN T HAS NOT INCREASED THE LOSS RETURNED. IN THESE FACTS AND CIR CUMSTANCES OF THE CASE, THE EXPENSES CLAIMED BY THE APPELLANT ARE ALL OWED. THE DISALLOWANCE OF RS.53,31,894/- MADE BY THE REVENUE IS DELETED. 5. AGGRIEVED BY THIS, THE REVENUE IS APPEAL BEFORE THE ITAT. I.T.A .NO.-1080/DEL/2014 PAGE 6 OF 10 6. THE LD. SR.DR RELIES UPON THE ASSESSMENT ORDER A ND SUBMITS THAT THE CIT(A) HAS COME TO A FINDING WITHOUT ADDRESSING WHAT HAS H APPENED IN 2005-06 AY. REFERENCE TO WHICH HAS SPECIFICALLY BEEN MADE BY TH E AO. RELIANCE WAS ALSO PLACED UPON CIT VS PIEM HOTEL PVT. LTD. 209 ITR 616 (BOM.). 7. THE LD.AR ON THE OTHER HAND FILED DETAILED WRITT EN SUBMISSIONS IN SUPPORT OF ITS CLAIM. REFERRING TO THE SAME IT WAS HIS SUB MISSION THAT THERE IS NO DOUBT THAT HOTEL SEA ROCK WAS OWNED BY THE ASSESSEE, AN D IT WAS UNDER EXTENSIVE RENOVATION DURING THE YEAR UNDER CONSIDERATION. IT WAS HIS SUBMISSION THAT ITS OPERATIONS WERE TEMPORARILY SUSPENDED AND THERE IS NOTHING ON RECORD TO SHOW THAT THE HOTEL BUSINESS WAS PERMANENTLY CLOSED. IT WAS HIS SUBMISSION THAT THE AO HAVING ALLOWED ONLY GOVERNMENT DUES EVIDENTLY WA S OF THE VIEW THAT IN ORDER TO PRESERVE THE CORPORATE STATUS CERTAIN EXPENSES WERE TO BE NECESSARILY ALLOWED. ACCORDINGLY IN THE CIRCUMSTANCES DISALLOWING EXPENS ES ON SECURITY OF THE PROPERTY, SALARY PAID TO AN ACCOUNTANT TO MAINTAIN THE DAY-TO -DAY ACCOUNTS BOOKS AND RECORDS AND SALARY PAID TO ONE OFFICE BOY DEFINITEL Y WOULD CONSTITUTE ESSENTIAL AND BARE MINIMUM EXPENDITURE TO MAINTAIN THE CORPORATE EXISTENCE OF THE ASSESSEE. THE INCURRING OF THE SAID EXPENDITURES IT WAS SUBMI TTED HAS NOT BEEN DISPUTED BY THE REVENUE. 7.1. INVITING ATTENTION TO THE EXPLANATION OFFERED BEFORE THE AO DATED 15.11.2010, IT WAS SUBMITTED THAT WHEN THE NATURE OF EXPENSES A RE EXAMINED, IT WOULD SHOW THAT THE EXPENDITURE WHICH HAS BEEN DISALLOWED BY T HE AO IS WATER EXPENSES, SECURITY CHARGES, SALARY OF ACCOUNTANT RANJEET AND ONE OFFICE BOY AND ELECTRICITY CHARGES. IT WAS HIS SUBMISSION THAT THE ASSESSEE C ANNOT KEEP ITS BUILDING I.T.A .NO.-1080/DEL/2014 PAGE 7 OF 10 UNPROTECTED AND RUNDOWN ESPECIALLY WHEN IT IS CARRY ING OUT RENOVATIONS. IN RESPONSE TO A QUERY, IT WAS SUBMITTED THAT THE REN OVATIONS ARE STILL GOING ON AND BEING AN EXPENSIVE PROJECT THE ASSESSEE IS LOOKING OUT FOR A PARTNER AND IN FACT IS IN THE PROCESS OF BEING AMALGAMATED. 7.2. RELIANCE WAS PLACED UPON SHINGAR LAMPS LTD. VS ACIT [2006] 150 TAXMAN 17 (ASR) (MAG.); K.N.P. SECURITIES P.LTD. [2010] 1 ITR 130 (MUM.); CIT VS ANITA JAIN [2009] 182 TAXMAN 173 (DEL.); URBAN MASS TRANS IT CO.LTD. VS ACIT [2013] 39 TAXMANN.COM 121; CIT VS RAMPUR TIMBER COMPANY LTD. 129 ITR 58 (ALLAHABAD); NAKODAR BUS SERVICES PVT.LTD. 179 ITR 506 (PUN.); C HENNAI & CO. PVT.LTD. VS CIT 206 ITR 616 (BOM.); HINDUSTAN CHEMICALS WORKS LTD. VS CIT 124 ITR 561; AND BIRLA COTTON SPINNING & WEAVING MILLS LTD. VS CIT 6 4 ITR 568, 584 (CAL.). 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. A PERUSAL OF THE SAME WOULD SHOW THAT BEFOR E THE ASSESSING OFFICER, THE ASSESSEE VIDE ITS LETTER DATED 15.11.2010 HAS SUBMI TTED THAT THE EXPENDITURE INCURRED IS FOR MAINTAINING ITS CORPORATE STRUCTURE IN EXISTENCE AND PRESERVING THE ASSETS/INFRASTRUCTURE. THE SAID EXPLANATION HAS BE EN EXTRACTED IN PARA 2.2 OF THE ASSESSMENT ORDER. IT HAS ALSO BEEN SUBMITTED THAT THE ASSESSEE COMPANY HAS CLAIMED THAT IT HAS MAINTAINED ALL NECESSARY LICENS ES ETC. REQUIRED FOR THE OPERATION OF A HOTEL. WE PAUSE HERE AND FIND ON GOI NG THROUGH THE MATERIAL AVAILABLE ON RECORD AND CONSIDERING THE ARGUMENTS O F THE LD. SR. DR. THAT NOTHING HAS BEEN BROUGHT ON RECORD BY THE REVENUE TO SHOW T HAT THE FACTS AS NARRATED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER AND NOT D ISPUTED BY THE REVENUE ARE NO LONGER TRUE OR HAVE ALL ALONG BEEN AN INCORRECT ASS ERTION OF FACTS. WE FURTHER FIND I.T.A .NO.-1080/DEL/2014 PAGE 8 OF 10 THAT REFERRING TO THE DETAILS OF THE EXPENDITURE WH ICH HAVE BEEN EXTRACTED IN THE EARLIER PART OF THIS ORDER THE ASSESSEE HAS SUBMITT ED THAT THE EXPENSES WERE BONAFIDE AND WERE NECESSARY GOVERNMENT DUES WHICH S TATUTORILY ARE REQUIRED TO BE PAID AND HAVE BEEN NECESSARILY INCURRED FOR KEEPING ITS BUSINESS ALIVE. WE FAIL TO COMPREHEND THE RELEVANCE OF THE FACTS REFERENCE TO WHICH HAS BEEN MADE BY THE AO NAMELY IN THE PROCEEDINGS UNDER SECTION 153A REA D WITH SECTION 143(3) IN 2005-06 AY. THE REVENUE HAS SUBMITTED THAT BUSINES S STILL HAS NOT COMMENCED EVEN TODAY AN ARGUMENT UNSUPPORTED BY ANY FACT. TH E LD.AR ALSO RESPONDED AGAIN WITHOUT ANY EVIDENCE THAT THE ASSESSEE WAS ON THE LOOK OUT FOR A PARTNER AND/OR FOR A TAKE OVER/AMALGAMATION OPTIONS AS THE COSTS OF RENOVATION ARE PROHIBITIVE AND THE ASSESSEE IS MANAGING TO KEEP AN D PROTECT ITS CORPORATE ENTITY ALIVE AND CARRYING OUT WHATEVER RENOVATIONS THE FIN ANCIAL POSITION PERMITS. WE FIND THAT ALL THESE ARGUMENTS BASED ON PROBABILITIE S AND POSSIBILITIES ARE OF NO RELEVANCE. WHAT IS RELEVANT IS THAT ALL NECESSARY LICENSES ETC. REQUIRED TO KEEP THE HOTEL BUSINESS ALIVE ARE BEING MAINTAINED BY THE AS SESSEE. THE ASSESSING OFFICER HIMSELF WAS CONVINCED THAT THE GOVERNMENT DUES BE ING THE MINIMUM STATUTORY EXPENSES WERE ALLOWABLE AND AS A RESULT THEREOF HE HAS ALLOWED DUTIES AND TAXES, INSURANCE OF ASSETS, LICENSE FEES AND MVAT EXP ENSES. CONSIDERING THE NATURE OF EXPENSES WHICH HAVE BEEN ALLOWED BY THE AO, WE F IND NO GOOD REASON WHY WATER EXPENSES AND ELECTRICITY EXPENSES CAN BE DISALLOWED. WE ALSO FIND NO GOOD REASON WHY SECURITY CHARGES PAID TO SECURE THE ASSETS OF THE ASSESSEE CAN BE DISALLOWED AS MAINTENANCE OF PHYSICAL ASSETS AND SE CURING THE PROPERTY FROM VANDALS, TRESPASSERS ETC. IS THE BARE MINIMUM EXPEN DITURE NECESSARILY REQUIRED TO I.T.A .NO.-1080/DEL/2014 PAGE 9 OF 10 BE INCURRED. SIMILARLY, SALARY OF ONE ACCOUNTANT A ND ONE OFFICE BOY CAN HARDLY BE SAID TO BE AN EXPENDITURE WHICH WAS NOT INCURRED WH OLLY AND EXCLUSIVELY FOR THE BUSINESS OF THE ASSESSEE. 8.1. WHILE ARRIVING AT THE CONCLUSION, WE HAVE TAKE N INTO CONSIDERATION THE DECISION RELIED UPON BY THE LD. SR. DR THAT IS CIT(A) VS PIEM HOTEL PRIVATE LIMITED (CITED SUPRA). ON A PERUSAL OF THE SAME, IT IS SEE N THAT THE ISSUE BEFORE THE HONBLE BOMBAY HIGH COURT WAS WHETHER THE BUSIN ESS COULD HAVE BEEN SAID TO HAVE BEEN SET UP OR NOT. THE BUSINESS BEING HOT EL BUSINESS. CONSIDERING THE FACT THAT ONLY A BANQUET HALL WHICH HAD BEEN COMPLE TED AT THE RELEVANT POINT OF TIME WHICH HAD BEEN LET OUT THE CLAIM OF THE ASSESS EE THAT INCOME WAS FROM HOTEL BUSINESS WAS NOT ALLOWED. THE HONBLE COURT CAME T O THE CONCLUSION THAT THE HOTEL BUSINESS COULD NOT BE SAID TO HAVE BEEN SET U P SIMPLY BECAUSE A BANQUET HALL WAS LET OUT BECAUSE UNLESS THE HOTEL BUILDING WAS COMPLETED THE HONBLE COURT HELD THAT THE GAMUT OF ACTIVITIES WHICH A HOT EL IS REQUIRED TO UNDERTAKE CANNOT BE SAID TO HAVE BEEN READY FOR USE AND THUS MERELY BECAUSE THE BANQUET HALL WAS READY IN THE INCOMPLETE HOTEL BUILDING THE HOTEL BUSINESS IT WAS HELD COULD NOT HAVE BEEN SET UP. WE FIND ON CONSIDERATIO N OF THE PRINCIPLE LAID DOWN THEREIN, ON THE FACTS AVAILABLE AND THE ISSUE UNDER CONSIDERATION BY THE COURT IT IS SEEN THAT IT HAS NO BEARING ON THE FACTS OF THE PRE SENT CASE. 8.2. ACCORDINGLY CONSIDERING THE JUDICIAL PRECEDENT S RELIED UPON AND THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT THE DEC ISION ARRIVED AT IN THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE FULLY SUPPORTS THE IMPUGNED ORDER. A TEMPORARY LULL AT A POINT OF TIME IN THE BUSINESS O F THE ASSESSEE IN THE ABSENCE OF I.T.A .NO.-1080/DEL/2014 PAGE 10 OF 10 ANY FACT OR EVIDENCE TO THE CONTRARY CANNOT LEAD TO THE CONCLUSION IN THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE THAT THE BUSINE SS HAS PERMANENTLY CLOSED ESPECIALLY IN VIEW OF THE FACT THAT AS PER THE ASSE RTIONS OF THE ASSESSEE BEFORE THE ASSESSING OFFICER THAT ITS LICENSES ETC ARE BEING M AINTAINED AND KEPT INTACT ENSURING THAT THE HOTEL IS READY FOR OPERATION. A FACT WHICH HAS NOT BEEN DISPUTED AS LICENSE FEES HAVE BEEN ALLOWED BY THE AO HIMSELF . 9. ACCORDINGLY, IN VIEW OF THE DETAILED DECISION AS ELABORATED ABOVE, WE FIND NO GOOD REASON TO INTERFERE WITH A FINDING ARRIVED AT BY THE CIT(A). ACCORDINGLY DISMISSING THE DEPARTMENTAL APPEAL THE IMPUGNED ORD ER IS UPHELD. 10. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 29 TH OF JULY 2016. SD/- SD/- (L. P. SAHU) (DIVA SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER *AMIT KUMAR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR, ITAT NEW DEL HI