M/s.Escapade Resorts P.Ltd, Cochin V. The ACIT, Cochin

ITA 159/COCH/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 8406 (ITAT-COCHIN)
• Duration Of Justice: 2 year(s) 3 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-07-2016
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 07-06-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 11-04-2014
• Court: TRIBUNAL
• Department Lawyers: A DHANARAJ
• Assessee Lawyers: P K SASIDHARAN
• Keywords: Capital asset; Depreciation; Opportunity of being heard; Revenue expenditure; Capital expenditure
• Section: 80IB; 32; 37

Judgement Text

ITA NO.159/COCH/2014 1 , IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN . . , ., ! ! ! ! BEFORE S/SHRI B. P. JAIN, AM & GEORGE GEORGE K., JM ' ' ' ' ./ I.TA NO.159/COCH/2014 ( #$ % /ASSESSMENT YEAR : 2008-09) M/S. ESCAPADE RESORTS PVT. LTD., C/O CASINO HOTEL BUILDING, WILLINGDON ISLAND, KOCHI-682 003. VS THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-1(1), KOCHI. ( &' &' &' &' /ASSESSEE APPELLANT) ( ( (( ( ) ) ) ) &' &'&' &' /REVENUE -RESPONDENT) & . . ' ./PAN NO. AAACE 5978L &' * + /ASSESSEE BY SHRI P.K. SASIDHARAN, CA ( ) &' * + /REVENUE BY SHRI A. DHANARAJ, SR. DR ,- * ./ / DATE OF HEARING 07/06/2016 0 % * ./ /DATE OF PRONOUNCEMENT 26/07/2016 1 1 1 1 /ORDER PER B.P. JAIN, AM: THIS APPEAL OF THE ASSESSEE ARISES FROM THE ORDER OF THE LD. CIT(A)-II, KOCHI DATED 02/12/2013 FOR THE ASSESSMENT YEAR 2008-09. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS O F APPEAL: 1. THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPE ALS) IS BAD IN LAW AND OPPOSED TO FACTS AND CIRCUMSTANCES OF THE CASE. ITA NO.159/COCH/2014 2 2 (A) THE LEARNED COMMISSIONER OF INCOME TAX (APPEA LS) OUGHT NOT TO HAVE CONFIRMED THE DISALLOWANCE OF RS.3,20,06,522/- AS REVENUE EXPENDITURE AS THE CLAIM WAS BASED ON THE DECISION OF THE MADRAS HIGH COURT IN THE CASE OF TVS LIEN LOGISTICS LTD. NONE OF THE REASONS STATED BY THE COMMISSIONER OF INCOME TAX(APPEALS) JUSTIFIE S THE DISALLOWANCE. (B) THE CIT(A) OUGHT TO HAVE FOLLOWED THE DECISION OF THE INCOME TAX APPELLATE TRIBUNAL AND ALLOWED THE CLAIM. 3.(A) THERE IS NO JUSTIFICATION IN CONFIRMING THE D ISALLOWANCE OF DEDUCTION U/S. 80IB TO THE EXTENT OF RS.10,68,353/- . AS THE ACTIVITIES LIKE AYURVEDIC TREATMENT, TELEPHONE CHARGES, INCENTIVE O N FOREIGN EXCHANGE ETC. ARE INSEPARABLE PART OF THE HOSPITABI LITY BUSINESS OF THE APPELLANT, THE INCOME THERE FROM SHOULD HAVE BEEN C ONSIDERED AS ELIGIBLE FOR DEDUCTION U/S. 80IB. (B) CONSISTENT WITH THE STAND OF THE DEPARTMENT, PR OPORTIONATE EXPENDITURE RELATING TO THE ABOVE ACTIVITIES SHOULD HAVE BEEN ALLOWED AS A DEDUCTION. 4. (A) THERE IS NO JUSTIFICATION FOR REJECTING THE CLAIM REGARDING INTEREST ON INCOME TAX REFUND. THE COMMISSIONER OF INCOME TAX(A PPEALS) OUGHT TO HAVE HELD THAT INTEREST ON INCOME TAX REFUND ATTAIN S THE CHARACTER OF INCOME ONLY ON THE RESPECTIVE ASSESSMENTS REACHING FINALITY. (B) IN ANY CASE THE COMMISSIONER OF INCOME TAX(APPE ALS) OUGHT TO HAVE DIRECTED THE ASSESSING OFFICER TO ASSESS ONLY THE INTEREST INCOME FINALLY DETERMINED FOR THE RESPECTIVE ASSESSMENT YE ARS. (C) INTEREST ASSESSED AS INCOME IN EARLIER YEARS WH ICH WAS WITHDRAWN ON ACCOUNT OF REVISION OF ASSESSMENT DURING THE PREVIO US YEAR OUGHT TO HAVE BEEN HELD AS ALLOWABLE AS A DEDUCTION FROM THE INTEREST INCOME. ITA NO.159/COCH/2014 3 5. FOR THESE AND OTHER GROUNDS THAT MAY BE PERMITT ED TO BE ADDUCED AT THE TIME OF HEARING OF THE CASE, IT IS PRAYED TH AT THE ORDER OF THE LOWER AUTHORITIES MAY BE ORDERED TO BE MODIFIED TO THE EXTENT PRAYED FOR IN THE APPEAL . 3. GROUND NOS. 1 & 5 ARE GENERAL IN NATURE AND THEREFO RE, DO NOT REQUIRE ANY ADJUDICATION. AS REGARDS GROUND NO. 1, THE BRIEF F ACTS OF THE CASE ARE THAT THE ASSESSEE HAS CLAIMED CURRENT REPAIRS IN THE LEASE H OLDING BUILDING AND CURRENT REPAIRS IN THE PLANT AND MACHINERY AND INSTALLATION IN THE COMPUTATION OF INCOME AS UNDER: KALARI KOVILAKAM CURRENT REPAIRS WDV OF SANITARY/ELECTRICAL INSTAL LATION ON LEASEHOLD BUILDING RS.29,87,100 VILASAM CURRENT REPAIRS, INSTALLATION INCLUDED IN PLANT AND MACHINERY RS.2,20,19,422 RS.3,20,06,522 ITA NO.159/COCH/2014 4 THE OBSERVATION AND FINDINGS OF THE ASSESSING OFFIC ER VIDE PARA 5 ARE REPRODUCED HEREINBELOW FOR THE SAKE OF CONVENIENCE: - 5. THUS THE BASIC TEST TO FIND OUT WHETHER A PART ICULAR EXPENDITURE COMES UNDER CURRENT REPAIRS IS TO SEE WHETHER EXPENDITURE HAS BEEN INCURRED TO PRESERVE AND MAINTAIN AN ALREADY EXISTING ASSET. T HE OBJECT OF THE EXPENDITURE MUST NOT BE TO BRING A NEW ASSET IN TO EXISTENCE OR TO OBTAIN A NEW ADDITION. BUT, IN THE INSTANT CASE, THE ASSESSE E HAS CLAIMED AS CURRENT REPAIRS, THE VALUE OF BUILDING ON LEASEHOLD LAND CA PITALIZED ON 01/04/2007. ACTUALLY, THE EXPENDITURE HAD ALREADY BEEN INCURRED BEFORE THE PREVIOUS YEAR AND IT IS IN RESPECT OF AN ENTIRELY NEW CAPITAL ASS ET BUILDING. IN FACT, THE ASSESSEE HAS INCLUDED THE SAME IN ITS FIXED ASSETS IN THE BALANCE SHEET AND HAS TAKEN IT OUT ONLY FOR INCOME TAX PURPOSES. STRE TCHING TO ANY EXTENT, THIS EXPENDITURE CAN NEVER BE PUT UNDER CURRENT REPAIRS . SINCE THIS EXPENDITURE CAN NEVER BE PUT UNDER CURRENT REPAIRS. SINCE TH IS EXPENDITURE IS CAPITAL IN NATURE, IT CANNOT BE ALLOWED U/S. 37 OF THE ACT ALS O. MOREOVER, THIS EXPENDITURE HAS NOT BEEN INCURRED DURING THE RELEVA NT PREVIOUS YEAR. CONSIDERING ALL THESE, CLAIM OF THE ASSESSEE IS REJ ECTED. HOWEVER, SINCE IT IS A CAPITAL ASSET COMING UNDER PLANT AND MACHINERY, DEP RECIATION @15% IS GRANTED ON IT. THE RESULTANT DISALLOWANCE COMES TO RS.2,72,05,544 (3,20,06,522- 48,00,978). 4. THE LD. CIT(A) CONFIRMED THE ACTION OF THE AS SESSING OFFICER. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUS ED THE FACTS OF THE CASE. THE UNDISPUTED FACT IN THE PRESENT CASE IS THAT THE EXP ENDITURE HAS BEEN INCURRED IN THE PRECEDING YEAR BEFORE THE IMPUGNED YEAR. THERE FORE, AT THE OUTSET, THIS CANNOT BE A REVENUE EXPENDITURE IN THE IMPUGNED YEA R. FURTHER AN IDENTICAL ISSUE CAME UP BEFORE THE ITAT, COCHIN BENCH IN THE ASSESSEES OWN CASE IN I.T.A. NOS. 677 & 658/COCH/2010 WHICH WAS DECIDED VIDE ORD ER DATED 16-11-2012 WHEREIN IT WAS HELD THAT THE ASSESSEE IS NOT ENTITL ED FOR DEDUCTION OF THE IMPUGNED AMOUNT. THE RELEVANT PARA 9 OF THE ORDER OF THE ITAT, COCHIN BENCH ITA NO.159/COCH/2014 5 IN I.T.A. NOS. 677&658/COCH/2010 IS REPRODUCED HERE INBELOW FOR THE SAKE O CONVENIENCE:- 9. WE SHALL NOW TAKE UP THE APPEAL FILED BY THE RE VENUE. THE FIRST ISSUE PERTAINS TO THE DISALLOWANCE OF CURRENT REPAIRS EXPENSES AMOUNTING TO RS. 1.50 CRORES. IN THIS REGARD, WE EXTRACT BELOW THE RELEVANT OBSERVATIONS MADE BY THE TRIBUNAL IN THE CASE OF HOTEL & ALLIED TRADES (P) LTD. IN I.T.A. NOS. 678 & 657/2010: 13. WE SHALL NOW TAKE UP THE APPEAL FILED BY TH E REVENUE. THE FIRST ISSUE RELATES TO THE DISALLOWANCE OF CLAIM OF CURRENT REPAIRS AMOUNTING TO RS.73,71,453/-. THE FACTS RELATING THERETO ARE THAT THE ASSESSEE CONSTRUCTED A BUILDI NG IN THE EARLIER YEARS ON THE LAND TAKEN ON LEASEHOLD BASIS. THE ASSESSEE DULY CAPITA LIZED THE COST OF BUILDING AND CLAIMED DEPRECIATION THEREON. THE WRITTEN DOWN VALUE OF TH E SAID BUILDING STOOD AT RS.73,71,4533/- AS AT THE BEGINNING OF THE YEAR UND ER CONSIDERATION. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE CLAIMED THE WDV V ALUE OF THE BUILDING AS REVENUE EXPENSES, BY FOLLOWING THE DECISION RENDERED BY HO NBLE MADRAS HIGH COURT IN THE CASE OF TVS LEAN LOGISTICS LTD (293 ITR 432). IT APPEARS T HAT THE ASSESSEE CLAIMED THE WDV VALUE OF THE BUILDING AS EXPENDITURE, ONLY IN ITS STATEME NT OF TOTAL INCOME COMPUTED FOR THE PURPOSES OF INCOME TAX, I.E., IT DID NOT TREAT THE BUILDING COST AS EXPENDITURE IN ITS BOOKS OF ACCOUNT. HOWEVER, THE ASSESSEE DID NOT CLAIM DEPRE CIATION ON THE WDV VALUE OF THE BUILDING. THE AO DISALLOWED THE SAID CLAIM BY HOLD ING THAT THE COST OF CONSTRUCTION OF BUILDING IS CAPITAL IN NATURE. HOWEVER, THE LD CI T(A) ALLOWED THE CLAIM OF THE ASSESSEE BY FOLLOWING THE DECISION OF THE HONBLE MADRAS HIGH C OURT REFERRED SUPRA. 14. BEFORE US, THE LD D.R POINTED OUT THAT THE EX PENDITURE INCURRED BY THE ASSESSEE ON CONSTRUCTION OF BUILDING IS A CAPITAL EXPENDITURE, EVEN IF THE SAID BUILDING WAS PUT UP ON THE LEASE HOLD LAND. THE LD D.R FURTHER SUBMITTED THAT THE IMPUGNED EXPENDITURE WAS NOT INCURRED DURING THE YEAR UNDER CONSIDERATION AND H ENCE, EVEN IF FOR A MOMENT THE CLAIM OF THE ASSESSEE IS ACCEPTED, THE SAME CANNOT BE TR EATED AS THE EXPENDITURE OF THE YEAR UNDER CONSIDERATION. 15. WE HAVE HEARD THE RIVAL CONTENTIONS ON THIS ISSUE. FIRST OF ALL, THE ASSESSEE HAS NOT SHOWN AS TO HOW THE PROVISIONS OF EXPLANATION 1 TO SEC.32 ARE NOT ATTRACTED TO THE FACTS OF THE INSTANT CASE. SECONDLY, THE ASSESSEE HAS FAILED TO SHOW THE PARITY OF FACTS BETWEEN THE INSTANT CASE AND THE CASE LAW RELIED ON BY IT. THIRDLY, WHICH IN OUR VIEW IS VERY VITAL, THE IMPUGNED EXPENDITURE WAS NOT INCUR RED DURING THE YEAR UNDER ITA NO.159/COCH/2014 6 CONSIDERATION. THE BUILDING WAS CONSTRUCTED ON THE LEASE HOLD LAND IN THE EARLIER YEARS. ACCORDINGLY, WE FIND FORCE IN THE CONTENTION OF THE REVENUE THAT THE EXPENDITURE INCURRED IN ANY OF THE EARLIER YEAR CANNOT BE CLAIMED AS REVENU E EXPENDITURE DURING THE YEAR UNDER CONSIDERATION. THE LD CIT(A) HAS OMITTED TO CONSID ER THE PERIOD OF INCURRING THE IMPUGNED EXPENDITURE. ACCORDINGLY, WE SET ASIDE THE ORDER O F LD CIT(A) ON THIS ISSUE AND RESTORE THAT OF THE ASSESSING OFFICER. IT WAS SUBMITTED BEFORE US THAT THE FACTS AND CIRCU MSTANCES SURROUNDING THE CLAIM OF RS.1.50 CRORES MADE IN THE INSTANT CASE ARE ALSO IDENTICAL WITH THE ONE CONSIDERED IN THE ABOVE CITED CASE. WE NOTICE THAT THE ASSESSEE DID NOT CLAIM DE PRECIATION ON THE BUILDING TERMED AS LEASEHOLD BUILDING BY AFFIXING FOLLOWING NOTES IN THE DEPRECIATION STATEMENT:- NOTE: DEPRECIATION ON LEASEHOLD BUILDING (OPG. WDV = RS.1,50,95,476?-) IS NOT CONSIDERED, AS THE ENTIRE AMOUNT IS TAKEN AS REVENU E EXPENDITURE, IN VIEW OF DECISION OF MADRAS HIGH COURT. WE HAVE ALREADY TAKEN A VIEW ON AN IDENTICAL ISSUE IN THE CASE OF M/S HOTEL & ALLIED TRADES (P) LTD, REFERRED SUPRA. CONSISTENT WITH THE VIEW TAKEN THEREIN, WE HOLD THAT THE ASSESSEE IS NOT ENTITLED FOR DEDUCTION OF THE IMPUGNED AMOUNT A S REVENUE EXPENDITURE DURING THE YEAR UNDER CONSIDERATION. ACCORDINGLY WE SET ASIDE THE ORDER OF LD CIT(A) ON THIS ISSUE AND RESTORE THAT OF THE AO. 6. IN THE CIRCUMSTANCES AND FACTS OF THE CASE, TH E EXPENDITURE CLAIMED BY THE ASSESSEE CANNOT BE CLAIMED AS REVENUE EXPENDITURE. MOREOVER THE ASSESSEE HAS NOT SUBSTANTIATED THAT IT IS A REVENUE EXPENDIT URE FOR CLAIMING IT AS CURRENT REPAIRS. IT WAS ARGUED THAT THE ASSESSEE HAS DISMA NTLED THE BUILDING AND CONSTRUCTED A NEW BUILDING AND PLANT AND MACHINERY IS ACTUALLY INSTALLED AND INCLUDES INSTALLATION EXPENDITURE AS WELL. THERE I S NO ELEMENT OF CURRENT REPAIRS IN THE BUILDING AS WELL AS IN THE PLANT AND MACHINERY IN VIEW OF EXPLANATION 1 TO ITA NO.159/COCH/2014 7 SECTION 32, WHICH IS REPRODUCED HEREINBELOW WHICH H AS BEEN INSERTED BY THE TAXATION LAWS (AMENDMENT AND MISCELLANEOUS PROVISIO NS) ACT, 1986 WITH EFFECT FROM 01.04.1988. EXPLANATION 1 WHERE THE BUSINESS OR PROFESSION OF THE ASSESSEE IS CARRIED ON IN A BUILDING NOT OWNED BY HIM BUT IN RESPECT OF WHICH THE ASSESSEE HOLDS A LEASE OR OTHER RIGHT OF OCCUPANCY AND ANY CAPITAL E XPENDITURE IS INCURRED BY THE ASSESSEE FOR THE PURPOSES OF THE BUSINESS OR PR OFESSION ON THE CONSTRUCTION OF ANY STRUCTURE OR DOING OF ANY WORK IN OR IN RELA TION TO, AND BY WAY OF RENOVATION OR EXTENSION OF, OR IMPROVEMENT TO, THE BUILDING, THEN, THE PROVISIONS OF THIS CLAUSE SHALL APPLY AS IF THE SAI D STRUCTURE OR WORK IS A BUILDING OWNED BY THE ASSESSEE THUS EXPENDITURE INCURRED SHALL BE DEALT WITH ACCOR DING TO THE PROVISIONS OF EXPLANATION 1 TO SECTION 32 OF THE ACT. IN THE FAC TS AND CIRCUMSTANCES OF THE CASE AND OUR FINDINGS HEREINABOVE, WE DO NOT FIND A NY INFIRMITY IN THE ORDER OF THE LD. CIT(A) WHO HAS RIGHTLY CONFIRMED THE ACTION OF THE ASSESSING OFFICER. THUS GROUND NO. 2 OF THE ASSESSEE IS DISMISSED. 7. AS REGARDS GROUND NO. 3, THE ASSESSEE CLAIMED DEDUCTION IN RESPECT OF MARARI BEACH RESORT. THE ELIGIBLE BUSINESS FOR WHI CH DEDUCTION U/S. 80IB WAS GRANTED TO THE ASSESSEE WAS HOTEL BUSINESS BUT THE HOTEL AT MARARI BEACH RECEIVED REMUNERATION FOR OTHER FACILITIES LIKE AYU RVEDIC TREATMENT, ACTIVITY SALES, SWIMMING POOL, LAUNDRY ETC. INCOME FROM THESE ACTIV ITIES WERE NOT ELIGIBLE FOR DEDUCTION U/S. 80IB OF THE ACT.. IT WAS HELD BY THE ASSESSING OFFICER THAT ITA NO.159/COCH/2014 8 AYURVEDIC TREATMENT IS NOT PART OF HOTEL BUSINESS A ND IT IS ONLY THE HOTEL BUSINESS ALONE WHICH IS ELIGIBLE FOR DEDUCTION U/S. 80IB AND NOT THE AYURVEDIC TREATMENT. HOWEVER, THE EXPLANATION OF THE LD. COUNSEL FOR THE ASSESSEE THAT ONLY THE PROFIT PORTION AND NOT THE ENTIRE RECEIPTS SHOULD BE TAKEN OFF FORM THE ELIGIBLE PROFITS WAS ACCEPTED BY THE ASSESSING OFFICER. ACCORDINGLY , THE ASSESSING OFFICER ALLOWED PART RELIEF AND THE ASSESSEE WAS ENTITLED T O 50% DEDUCTION U/S. 80IB AND EXCESSIVE DEDUCTION GRANTED AMOUNTING TO RS.10,68,3 53/- WAS DISALLOWED. 8. THE LD. CIT(A) CONFIRMED THE ACTION OF THE AS SESSING OFFICER. 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. AN IDENTICAL ISSUE HAS BEEN DEALT BY THE ITAT, COCHIN BENCH IN THE ASSESSEES OWN CASE IN I.T.A. NOS. 677 & 658/COCH/2012 DATED 16/11 /2012 AND THE RELEVANT FINDINGS ARE REPRODUCED HEREINBELOW FOR THE SAKE OF CONVENIENCE: 11. WE NOTICE THAT THE ASSESSING OFFICER HAS RESTRI CTED THE AMOUNT FROM THE MARARI BEACH UNIT ON THE BASIS OF CERTAIN PRESUMPTIONS WITHOUT B RINGING ANY MATERIAL ON RECORD. THE ASSESSING OFFICER FAILED TO EXAMINE THE CLAIM OF TH E ASSESSEE THAT IT HAS MAINTAINED SEPARATE BOOKS OF ACCOUNTS FOR EACH OF THE THREE UNITS, THOU GH FOR THE PURPOSES OF INCOME TAX, ONE CONSOLIDATED AUDITED BALANCE SHEET AND PROFIT AND L OSS ACCOUNT WAS PREPARED. THE ASSESSEE HAS ALSO SUBMITTED THAT THE CUSTOMERS OF MARARI BEA CH UNIT ARE MAINLY FOREIGN TOURISTS AND ACCORDINGLY SUBSTANTIATED THE HIGHER PROFIT DECLARE D IN THAT UNIT. THE QUESTION WHETHER SEPARATE BOOKS OF ACCOUNT IS NECESSARY FOR THE PURP OSE OF CLAIMING DEDUCTION UNDER SEC. 80HH AND 80I WAS CONSIDERED BY THE HONBLE SUPREME COURT IN ITS RECENT DECISION IN THE ITA NO.159/COCH/2014 9 CASE OF BONGAIGAON REFINERY AND PETROCHEMICAL LIMIT ED IN CIVIL APPEAL NO. 1679 OF 2004 AND THE APEX COURT, VIDE ITS ORDER DATED 05-09-2012 HAS HELD AS UNDER: AT THE OUTSET, IT MAY BE STATED THAT THE IMPUGNED ORDER OF THE HIGH COURT IS CRYPTIC. ORDINARILY, WE WOULD HAVE REMITTED THE CASE TO THE HIGH COURT FOR DE NOVO CONSIDERATION. THE HIGH COURT HAS RELIED UPON ITS EARLIER JUDGMENT, WHICH, IN OUR VIEW, IS NOT APPLICABLE ON ALL FOURS TO THE FACTS OF THE PRESENT CASE. HOWEVER, TO PUT AN END TO THE LITIGATION, WE ARE OF THE VIEW, THAT THOUGH NEI THER SEC. 80HH NOR SEC. 80I (AS IT THEN STOOD) STATUTORILY OBLIGED BRPL TO MAINTAIN ITS ACC OUNTS UNIT-WISE AND THAT IT WAS OPEN TO BRPL, TO MAINTAIN ITS ACCOUNTS IN A CONSOLIDATED FORM IN ORDER TO PUT AN END TO THE LITIGATION BETWEEN THE TAX DEPARTMENT AND THE PSU WE REMIT THE CASE TO THE ASSESSING OFFICER TO ASCERTAIN WHETHER THE ASSESSEE HAD CORRECTLY CALCULATED ITS NET PROFITS FOR ASSESSMENT YEAR 1992-93 IN RESPECT OF I TS PETROCHEMICAL UNIT FOR THE PURPOSES OF CLAIMING DEDUCTION U/S. 80HH AND 80I OF THE I.T. ACT, 1961. IN THE PRESENT CASE, BRPL HAS PREPARED ITS FINANCIAL STATEMENTS ON CONSO LIDATED BASIS FROM WHICH IT HAS WORKED OUT UNIT-WISE NET PROFITS. IF NOT DONE, IT COULD BE DONE BY THE AUDITORS EVEN TODAY FROM THE CONSOLIDATED BOOKS OF ACCOUNTS. ONC E SUCH WORKING IS CERTIFIED BY THE AUDITORS THE NET PROFIT COMPUTATION (UNIT-WISE) COU LD BE PLACED BEFORE THE ASSESSING OFFICER WHO CAN FIND OUT WHETHER SUCH PROFIT(S) IS PROPERLY WORKED OUT ON THAT BASIS COMPUTE DEDUCTION U/S. 80HH/80I. THUS, THE HONBLE APEX COURT HAS APPROVED THE SPLIT TING UP OF PROFITS FOR THE PURPOSE OF COMPUTING THE DEDUCTION U/S 80HH/80I, EVEN IF THE A SSESSEE DID NOT MAINTAIN SEPARATE ACCOUNTS. IN THE INSTANT CASE, THE ASSESSEE HAS MAI NTAINED SEPARATE ACCOUNTS FOR EACH OF THE HOTEL UNITS AND LATER IT HAS CONSOLIDATED THEM IN O RDER TO PREPARE A SINGLE PROFIT AND LOSS ACCOUNT AND BALANCE SHEET. AS POINTED OUT THE LD C IT(A), THE AO HAS NOT POINTED OUT ANY MISTAKE IN THE ACCOUNTS MAINTAINED FOR THE MARARI B EACH UNIT. ACCORDINGLY, IN VIEW OF THE FOREGOING DISCUSSIONS, WE DO NOT FIND ANY INFIRMITY IN THE DECISION OF LD CIT(A) IN HOLDING THAT THE ASSESSEE IS ELIGIBLE TO CLAIM DEDUCTION U/ S 80IB OF THE ACT AS PER THE RESULTS DECLARED IN THE SEPARATE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE. HOWEVER, WE NOTICE THAT THE AO DID NOT EXAMINE THE SAID CLAIM WITH REFERENCE TO THE BOOKS OF ACCOUNT. ACCORDINGLY, WE DIRECT THE AO TO EXAMINE THE CLAIM U/S 80-IB VIS-A- VIS THE BOOKS OF ACCOUNT AND ALLOW THE SAME. THE ORDER OF LD CIT(A) STANDS MODIFIED ACCOR DINGLY. ITA NO.159/COCH/2014 10 IN THE PRESENT CASE ALSO, THE ASSESSEE HAS STATED T HAT IT HAS MAINTAINED BOOKS OF ACCOUNT FOR THE IMPUGNED YEAR BUT THEY HAVE NOT BEE N EXAMINED BY THE ASSESSING OFFICER WITH REGARD TO THE CLAIM AND ACCO RDINGLY, A DIRECTION IS GIVEN TO EXAMINE THE SAID CLAIM U/S. 80IB OF THE ACT VIS- -VIS BOOKS OF ACCOUNT AND DECIDE THE ISSUE ACCORDINGLY AFTER AFFORDING ADEQUA TE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THUS GROUND NO. 3 OF THE AS SESSEE IS ALLOWED FOR STATISTICAL PURPOSE. 10. AS REGARDS GROUND NO. 4, THE ASSESSING OFFICE R HAS INCLUDED INTEREST INCOME ON INCOME TAX REFUND WHICH WAS CONFIRMED BY THE LD. CIT(A). 11. THE LD. COUNSEL FOR THE ASSESSEE ARGUED THAT T HE MATTER HAS ALREADY ATTAINED FINALITY AT THE APPELLATE STAGE AND WHEN T HE ASSESSMENT REACHES FINALITY , INTEREST GRANTED MAY NOT HAVE ANY COMPAR ISON TO INTEREST GRANTED U/S. 143(1) OF THE ACT OR GRANTED IN INTIMATION. 12. THE LD. DR RELIED UPON THE ORDERS OF BOTH TH E AUTHORITIES BELOW. 13. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE FACTS OF THE CASE. THE ARGUMENT OF THE LD. COUNSEL FOR THE ASSESSEE DOES N OT HAVE ANY FORCE AS THE INCOME ACCRUED OR RECEIVED IN PARTICULAR ASSESSMENT YEAR EVEN THOUGH BY WAY OF INCOME TAX REFUND HAS ESSENTIALLY TO BE INCLUDED IN THE TOTAL INCOME OF THE ITA NO.159/COCH/2014 11 ASSESSEE WHICH HAS BEEN RIGHTLY DONE BY THE ASSESSI NG OFFICER AND HAS RIGHTLY BEEN CONFIRMED BY THE LD. CIT(A). ACCORDINGLY, WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) IN THIS REGARD. THUS GROUND NO. 4 OF THE ASSESSEE IS DISMISSED. 14. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS P ARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 26/07/2016. SD/- SD/- ( . ) (GEORGE GEORGE K.) ( . . ) (B. P. JAIN) /ACCOUNTANT MEMBER /JUDICIAL MEMBER & /PLACE: /COCHIN 2 /DATED: 26 TH SJULY, 2016 GJ/ 1 * (.3 43%. /COPY TO: 1. &' /M/S. ESCAPADE RESORTS PVT. LTD., C/O CASINO HOTEL BUILDING, WILLINGDON ISLAND, KOCHI-682 003. 2. () &' /THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-1 (1), KOCHI. 3. ,5 . ( )/THE COMMISSIONER OF INCOME-TAX(APPEALS)-II, KOCHI ., ITA NO.159/COCH/2014 12 4. ,5 . /THE COMMISSIONER OF INCOME-TAX,KOCHI. 5. 367 (. , /THE DR/ITAT, COCHIN BENCH. 6. 79 :- /GUARD FILE. 1, /BY ORDER ; /ASSISTANT REGISTRAR - .