DCIT, Circle - 8(2), Kolkata , Kolkata V. M/s. Oberoi Hotels Pvt. Ltd., , Kolkata

ITA 1091/KOL/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 2617 (ITAT-KOLKATA)
• Duration Of Justice: 10 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2015-2016
• Appeal Filed On: 09-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Earning of tax free income; Additional evidence; Rule 8D
• Section: 14A

Judgement Text

ITA NO. 1091/KOL/2019 ASSESSMENT YEAR: 2015-2016 M/S. OBEROI HOTELS PVT. LIMITED 1 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA A BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, VICE-PRESIDENT & SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER I.T.A. NO. 1091/KOL/2019 ASSESSMENT YEAR: 2015-2016 DEPUTY COMMISSIONER OF INCOME TAX,................. ......................APPELLANT CIRCLE-8(2), KOLKATA, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, 4 TH FLOOR, KOLKATA-700069 -VS.- M/S. OBEROI HOTELS PVT. LIMITED,................... ...........................RESPONDENT 4, MANGOE LANE, 6 TH FLOOR, KOLKATA-700001 [PAN: AAACO3408K] APPEARANCES BY: SHRI DHRUBAJYOTI ROY, JCIT, FOR THE APPELLANT SHRI A.K. GUPTA, F.C.A., FOR THE RESPONDEN T DATE OF CONCLUDING THE HEARING : FEBRUARY 12, 2020 DATE OF PRONOUNCING THE ORDER : MARCH 18, 2020 O R D E R PER SHRI P.M. JAGTAP, VICE-PRESIDENT : THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST TH E ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-23, KOLKATA DA TED 22.02.2019. 2. IN GROUND NO. 1, THE REVENUE HAS CHALLENGED THE ACTION OF THE LD. CIT(APPEALS) IN RESTRICTING THE DISALLOWANCE OF RS. 2,61,46,846/- MADE BY THE ASSESSING OFFICER UNDER SECTION 14A OF THE ACT TO RS.62,67 LAKHS. 3. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY, W HICH IS ENGAGED IN THE BUSINESS OF RUNNING HOTELS AND PROVIDING TECHNI CAL SERVICES FOR OPERATING HOTELS IN INDIA AND ABROAD. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY IT ON 30.09.2015 D ECLARING TOTAL INCOME OF RS.18,27,65,610/-. IN THE SAID RETURN, THE DIVID END INCOME OF ITA NO. 1091/KOL/2019 ASSESSMENT YEAR: 2015-2016 M/S. OBEROI HOTELS PVT. LIMITED 2 RS.16,42,75,442/- WAS CLAIMED TO BE EXEMPT BY THE A SSESSEE AND A DISALLOWANCE ON ACCOUNT OF EXPENDITURE INCURRED IN RELATION TO THE SAID EXEMPT INCOME WAS OFFERED TO THE EXTENT OF RS.10,34 ,482/- AS PER SECTION 14A OF THE ACT. IN THE ABSENCE OF SEPARATE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE IN RELATION TO EXPENSES INCURRED IN RE LATION TO EARNING OF EXEMPT INCOME, THE DISALLOWANCE OFFERED BY THE ASSE SSEE UNDER SECTION 14A AT RS.10,34,482/- WAS NOT FOUND ACCEPTABLE BY T HE ASSESSING OFFICER. HE INVOKED RULE 8D TO WORK OUT THE EXPENSES INCURRE D BY THE ASSESSEE IN RELATION TO THE EARNING OF THE EXEMPT INCOME AT RS. 2,71,81,828/- AND MADE A FURTHER DISALLOWANCE OF RS.2,61,46,846/- UND ER SECTION 14A. 4. THE DISALLOWANCE OF RS.2,61,46,846/- MADE BY THE ASSESSING OFFICER UNDER SECTION 14A READ WITH RULE 8D WAS CHALLENGED BY THE ASSESSEE IN THE APPEAL FILED BEFORE THE LD. CIT(APPEALS). DURIN G THE COURSE OF APPELLATE PROCEEDINGS BEFORE THE LD. CIT(APPEALS), A FRESH WORKING WAS PREPARED AND FURNISHED BY THE ASSESSEE CLAIMING THA T THE COMMON EXPENSES INCURRED BY IT IN RELATION TO THE EXEMPT I NCOME BY FOLLOWING AN APPROPRIATE METHOD WOULD BE RS.67.27 LAKHS. THE SAI D WORKING FURNISHED BY THE ASSESSEE FOR THE FIRST TIME BEFORE HIM WAS F ORWARDED BY THE LD. CIT(APPEALS) TO THE ASSESSING OFFICER FOR VERIFICAT ION ALONG WITH THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE. IN THE R EMAND REPORT SUBMITTED TO THE LD. CIT(APPEALS), THE ASSESSING OFFICER AGRE ED THAT THE QUANTUM OF EXPENSES IN RELATION TO THE EXEMPT INCOME AS WORKED OUT BY THE ASSESESE AT RS.67.27 LAKHS WAS REASONABLE. KEEPING IN VIEW T HIS CATEGORICAL FINDING GIVEN BY THE ASSESSING OFFICER IN HIS REMAND REPORT ON VERIFICATION OF THE WORKING FURNISHED BY THE ASSESSEE IN THE LIGHT OF T HE RELEVANT DOCUMENTARY EVIDENCE, THE LD. CIT(APPEALS) RESTRICT ED THE DISALLOWANCE OF RS.2,61,46,846/- MADE BY THE ASSESSING OFFICER UND ER SECTION 14A TO RS.67.27 LAKHS. 5. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES ON THIS ISSUE AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON REC ORD. AS RIGHTLY ITA NO. 1091/KOL/2019 ASSESSMENT YEAR: 2015-2016 M/S. OBEROI HOTELS PVT. LIMITED 3 SUBMITTED BY THE LD. COUNSEL FOR THE ASSESSEE, THE REVISED WORKING OF EXPENSES INCURRED IN RELATION TO THE EARNING OF EXE MPT INCOME AS PREPARED BY THE ASSESESE BY FOLLOWING AN APPROPRIAT E METHOD OF ALLOCATION OF COMMON EXPENSES WAS FOUND TO BE FAIR AND REASONABLE BY THE ASSESSING OFFICER AFTER VERIFICATION AND KEEPIN G IN VIEW THIS CATEGORICAL FINDING GIVEN BY THE ASSESSING OFFICER IN HIS REMAND REPORT, THE LD. CIT(APPEALS) RESTRICTED THE ADDITION OF RS. 2,61,46,846/- MADE BY THE ASSESSING OFFICER UNDER SECTION 14A TO RS.67.27 LAKHS. AT THE TIME OF HEARING BEFORE THE TRIBUNAL, THE LD. D.R. HAS ALSO NOT RAISED ANY MATERIAL CONTENTION TO DISPUTE OR CHALLENGE THIS RELIEF ALLO WED BY THE LD. CIT(APPEALS), WHICH IS BASED ON THE CATEGORICAL FIN DING GIVEN BY THE ASSESSING OFFICER HIMSELF IN THE REMAND REPORT SUBM ITTED TO THE LD. CIT(APPEALS) STATING THAT THE REVISED WORKING OF EX PENDITURE INCURRED BY THE ASSESSEE IN RELATION TO THE EXEMPT INCOME AS PR EPARED BY THE ASSESSEE BY FOLLOWING AN APPROPRIATE METHOD OF ALLOCATION OF COMMON EXPENSES WAS FAIR AND REASONABLE. WE, THEREFORE, FIND NO INF IRMITY IN THE IMPUGNED ORDER OF THE LD. CIT(APPEALS) GIVING RELIEF TO THE ASSESSEE ON THIS ISSUE AND UPHOLDING THE SAME, WE DISMISS GROUND NO. 1 OF THE REVENUES APPEAL. 6. IN GROUND NO. 2, THE REVENUE HAS CHALLENGED THE ACTION OF THE LD. CIT(APPEALS) IN ACCEPTING THE ALV OF THE ASSESSEES HOUSE PROPERTY AT RS.3,60,000/- THEREBY REJECTING THE FAIR MARKET REN T OF RS.1,75,69,200/- ADOPTED BY THE ASSESSING OFFICER AS THE ALV. 7. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES ON THIS ISSUE AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON REC ORD. AS AGREED BY THE LD. REPRESENTATIVES OF BOTH THE SIDES, A SIMILAR IS SUE WAS INVOLVED IN ASSESSEES OWN CASE FOR THE EARLIER YEARS AND THE S AME HAS BEEN CONSISTENTLY DECIDED BY THE TRIBUNAL IN FAVOUR OF T HE ASSESSEE VIDE VARIOUS ORDERS PASSED FOR THE SAID YEARS. IN ONE OF SUCH ORDERS RECENTLY PASSED ON APRIL 12, 2019 FOR A.Y. 2010-11 IN I.T.A. NO. 2000/KOL/2016, A ITA NO. 1091/KOL/2019 ASSESSMENT YEAR: 2015-2016 M/S. OBEROI HOTELS PVT. LIMITED 4 SIMILAR ISSUE HAS BEEN DECIDED BY THE TRIBUNAL IN F AVOUR OF THE ASSESESE VIDE PARAGRAPH NO. 9 OF ITS ORDER, WHICH READS AS U NDER:- 9. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES A ND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON REC ORD. ALTHOUGH THE LD. D.R. HAS RELIED ON THE ORDER OF TH E ASSESSING OFFICER IN SUPPORT OF THE REVENUES CASE ON THIS IS SUE, IT IS OBSERVED THAT THE ADDITION ON THIS ISSUE WAS MADE B Y THE ASSESSING OFFICER BY FOLLOWING THE STAND TAKEN IN A SSESSEES OWN CASE FOR THE EARLIER YEARS AND THE LD. CIT(APPE ALS) HAS DELETED THE SAID ADDITION BY RELYING ON THE DECISIO N OF THE TRIBUNAL IN ASSESSEES OWN CASE ON A SIMILAR ISSUE FOR THE EARLIER YEARS, I.E. A.YS. 2007-08, 2008-09 AND 2009 -10. THE LD. CIT(APPEALS) THUS HAS FOLLOWED THE DECISION OF THE TRIBUNAL ON THE SIMILAR ISSUE RENDERED IN ASSESSEE S OWN CASE FOR THE EARLIER YEARS AND AS SUBMITTED BY THE LD. C OUNSEL FOR THE ASSESSEE, THE SAID DECISION OF THE TRIBUNAL HAS BEEN UPHELD BY THE HONBLE CALCUTTA HIGH COURT. THIS ISS UE THUS IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE D ECISION OF THIS TRIBUNAL RENDERED IN ASSESSEES OWN CASE FOR T HE EARLIER YEARS, WHICH HAS BEEN UPHELD BY THE HONBLE CALCUTT A HIGH COURT AND RESPECTFULLY FOLLOWING THE SAME, WE UPHOL D THE IMPUGNED ORDER OF THE LD. CIT(APPEALS) GIVING RELIE F TO THE ASSESSEE ON THIS ISSUE. GROUND NO. 2 IS ACCORDINGLY DISMISSED. 8. AS THE ISSUE INVOLVED IN THE YEAR UNDER CONSIDER ATION AS WELL AS ALL THE MATERIAL FACTS RELEVANT THERETO ARE SIMILAR TO THAT A.Y. 2010-11, WE RESPECTFULLY FOLLOW THE DECISION OF THE TRIBUNAL RE NDERED FOR A.Y. 2010-11 VIDE ORDER DATED APRIL 12, 2019 (SUPRA) AND UPHOLD THE IMPUGNED ORDER OF THE LD. CIT(APPEALS) GIVING RELIEF TO THE ASSESS EE ON THIS ISSUE. GROUND NO. 2 OF THE REVENUES APPEAL IS ACCORDINGLY DISMIS SED. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON MARCH 18, 202 0. SD/- SD/- (SATBEER SINGH GODARA) (P.M. JAGTAP ) JUDICIAL MEMBER VICE-PR ESIDENT) KOLKATA, THE 18 TH DAY OF MARCH, 2020 COPIES TO : (1) DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-8(2), KOLKATA, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, 4 TH FLOOR, KOLKATA-700069 ITA NO. 1091/KOL/2019 ASSESSMENT YEAR: 2015-2016 M/S. OBEROI HOTELS PVT. LIMITED 5 (2) M/S. OBEROI HOTELS PVT. LIMITED, 4, MANGOE LANE, 6 TH FLOOR, KOLKATA-700001 (3) COMMISSIONER OF INCOME TAX (APPEALS)-23, KOLKATA; (4) COMMISSIONER OF INCOME TAX- , KOLKATA (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.