DCIT 3(3)(2), MUMBAI V. TULIP HOSPITALITY SERVICES P.LTD, MUMBAI

ITA 243/MUM/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 2203 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2005-2006
• Appeal Filed On: 12-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D G PANSARILD; CROSS OBJECTION NO MUM
• Assessee Lawyers: ANUJ KISHNADWALA LD
• Keywords: Deemed to accrue or arise in india; Wrong claim; Bad and doubtful debts; Revised return
• Section: 143(3)

Judgement Text

ITA NO. 243/MUM/2017 & CO NO. 210/MUM/2018 M/S V.HOTELS LIMITED ASSESSMENT YEAR-2005-06 1 IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI , , BEFORE HONBLE SHRI JOGINDER SINGH, VP AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO. 243/MUM/2017 ( / ASSESSMENT YEAR: 2005-06 ) DY. COMMISSIONER OF INCOME TAX-3(3)(2) ROOM NO.609, 6TH FLOOR AAYKAR BHAVAN, M.K. ROAD MUMBAI-400 020. / VS. M/S. V. HOTELS LTD . (FORMERLY KNOWN AS M/S. TULIP HOSPITALITY SERVICES PVT. LTD. ) CHANDERMUKHI BUILDING (BASEMENT) BEHIND OBEROI HOTEL NARIMAN POINT, MUMBAI-400 021. ./ ./PAN/GIR NO. AABCT-6380-J ( /APPELLANT ) : ( / RESPONDENT ) ASSESSEE BY : SHRI ANUJ KISHNADWALA-LD.AR REVENUE BY : SHRI D.G. PANSARI- LD.DR & CROSS OBJECTION NO. 210/MUM/2018 ( / ASSESSMENT YEAR: 2005-06) M/S. V. HOTELS LTD. (FORMERLY KNOWN AS M/S. TULIP HOSPITALITY SERVICES PVT. LTD. ) CHANDERMUKHI BUILDING (BASEMENT) BEHIND OBEROI HOTEL NARIMAN POINT, MUMBAI-400 021. / VS. DY. COMMISSIONER OF INCOME TAX-3(3)(2) ROOM NO.609, 6TH FLOOR AAYKAR BHAVAN, M.K. ROAD MUMBAI-400 020. ./ ./PAN/GIR NO. AABCT-6380-J ( /APPELLANT ) : ( / RESPONDENT ) / DATE OF HEARING : 30/10/2018 / DATE OF PRONOUNCEMENT : 16/11/2018 ITA NO. 243/MUM/2017 & CO NO. 210/MUM/2018 M/S V.HOTELS LIMITED ASSESSMENT YEAR-2005-06 2 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID APPEAL BY REVENUE FOR ASSESSMENT YEAR [AY] 2005-06 CONTEST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-8, MUMBAI, [CIT(A)], APPEAL NO.CIT(A)-8/IT-498/15-16 DATED 26/10/2016 QUA DELETION OF PENALTY U/S 271(1)(C). THE EFFECTIVE GR OUNDS RAISED BY THE REVENUE READS AS UNDER:- 1. WHETHER ON THE FACTS AND CIRCUMSTANCES AND IN LAW, THE LD.CIT(A) WAS RIGHT IN DELETING THE PENALTY LEVIED U/S.271(1)(C) OF THE I.T.ACT, 1961 WITHOUT APPRECIATING THE FACT THAT NOT DISALLOWING THE PROV ISION OF BAD AND DOUBTFUL DEBTS AMOUNTING TO RS.62,67,756/- IN THE COMPUTATIO N OF INCOME IS MISTAKE ON THE PART OF THE ASSESSEE, WHICH CLEARLY INDICATE S THAT THE ASSESSEE HAD FILED INACCURATE PARTICULARS OF INCOME. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES AND IN L AW, THE LD.CIT(A) WAS RIGHT IN DELETING THE PENALTY LEVIED U/S.271(1)(C) OF THE I.T.ACT, 1961 WITHOUT APPRECIATING THE FACT THAT THE CLAIM OF HOTEL MANAG EMENT FEES TO THE EXTENT OF RS.1,46,841/- WAS CONSIDERED INADMISSIBLE AND EX CESSIVE AND IT WAS A CLEAR CASE OF FILING INACCURATE PARTICULARS OF INCO ME. 3. WHETHER ON THE FACTS AND CIRCUMSTANCES AND IN L AW, THE LD.CIT(A) WAS RIGHT IN DELETING THE PENALTY LEVIED U/S.271(1)(C) OF THE I.T.ACT, 1961 WITHOUT APPRECIATING THE FACT THAT THE CLAIM OF DELAYED PAY MENT OF EMPLOYEES CONTRIBUTION OF ESIC TO THE EXTENT OF RS.12,201/- W AS CONSIDERED INADMISSIBLE AS PER SECTION 36(1)(VA) AND BOARD'S CIRCULAR NO.49 4 DATED 22/09/1987 AND IT WAS A CLEAR CASE OF FILING INACCURATE PARTICULARS O F INCOME. THE NAME OF THE ASSESSEE HAS BEEN CHANGED FROM TULIP HOSPITALITY SERVICES LIMITED TO M/S. V.HOTELS LIMITED VIDE FRESH CERTIFICATE OF INCORPORATION CONSEQUENT UPON CHANGE OF NAME DATED 21/11/2006 ISSUED BY REGISTRAR OF COMPANIES, MAHARASHTRA. ACCORDINGLY REVISED FORM 36 REFLECTING THE AFORESAID CHANGE HAS BEEN FILED BY T HE REVENUE. FINDING THE SAME IN ORDER, WE PROCEED TO DISPOSE-OF F THE APPEAL AS ARGUED BEFORE US. THE ASSESSEE HAS FILED CROSS-OBJE CTIONS AGAINST THE SAME. THE REGISTRY HAS NOTED A DELAY OF 80 DAYS IN FILING OF CROSS- ITA NO. 243/MUM/2017 & CO NO. 210/MUM/2018 M/S V.HOTELS LIMITED ASSESSMENT YEAR-2005-06 3 OBJECTIONS. THE SAME SHALL BE CONSIDERED AFTER ADJU DICATING THE REVENUES APPEAL. 2. THE ASSESSEE BEING RESIDENT CORPORATE ENTITY ENGAGED IN HOTEL BUSINESS WAS ASSESSED BY ASSESSING OFFICER [AO] U/S 143(3) O N 26/12/2007 AT A LOSS OF RS.23.23 CRORES AFTER CERTA IN ADJUSTMENTS / DISALLOWANCES AS AGAINST REVISED RETURNED LOSS OF RS.40.11 CRORES FILED BY THE ASSESSEE 05/11/2007. THE FOLLOWING QUANTUM A DDITIONS AS CONFIRMED BY FIRST APPELLATE AUTHORITY WERE SUBJECT MATTER OF PENALTY PROCEEDINGS U/S 271(1)(C):- S.NO. PARTICULARS AMOUNT(RS.) 1. PROVISION FOR BAD & DOUBTFUL DEBTS 62,67,756/- 2. HOTEL MANAGEMENT FEES 1,46,841/- 3. DEEMED INCOME U/S. 2(24)(X) ON ACCOUNT OF LATE PAYMENT OF ESIC 12,201/- CONSEQUENTLY, THE ASSESSEE WAS SADDLED WITH IMPUGNE D PENALTY OF RS.23.51 LACS VIDE PENALTY ORDER DATED 30/11/2015 F OR FURNISHING OF INACCURATE PARTICULARS OF INCOME AS WELL AS FOR CON CEALMENT OF INCOME. 3. AGGRIEVED, THE ASSESSEE AGITATED THE SAME WITH S UCCESS BEFORE CIT(A) VIDE IMPUGNED ORDER DATED 26/10/2016 WHEREIN LD. FIRST APPELLATE AUTHORITY, RELYING UPON MULTIPLE JUDICIAL PRONOUNCE MENTS, CAME TO A CONCLUSION THAT THE ASSESSEE HAD FURNISHED EXPLANAT ION AGAINST QUANTUM ADDITIONS WHICH WAS NOT FOUND TO BE FALSE AND THERE FORE PENALTY WAS NOT JUSTIFIED. AGGRIEVED, THE REVENUE IS IN FURTHER APP EAL BEFORE US. 4. THE LD. AUTHORIZED REPRESENTATIVE FOR ASSESSEE [ AR], SHRI ANUJ KISHNADWALA, DRAWING OUR ATTENTION TO THE DOCUMENTS PLACED IN TH E PAPER-BOOK SUBMITTED THAT THERE WAS COMPLETE DISCLOSURE OF PROVISION FOR DOUBTFUL DEBTS IN THE BOOKS OF ACCOUNTS AND THEREFORE, THERE WAS N O QUESTION OF FURNISHING OF INACCURATE PARTICULARS OF INCOME OR CONCEALMENT ITA NO. 243/MUM/2017 & CO NO. 210/MUM/2018 M/S V.HOTELS LIMITED ASSESSMENT YEAR-2005-06 4 OF INCOME AS HELD BY LD. AO. IT HAS ALSO BEEN SUBMI TTED THAT THE ASSESSEE WAS INCURRING HEAVY LOSSES OVER SEVERAL YE ARS INCLUDING IMPUGNED AY WHICH COULD NEVER BE SET-OFF BY THE ASS ESSEE AND THEREFORE, THERE WAS NO OCCASION TO CLAIM FALSE DED UCTION OF THE EXPENDITURE. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE [DR], SHRI D.G.PANSARI SUBMITTED THAT THE ASSESSEE MADE AN ATTEMPT TO CLAI M THE DEDUCTION OF PROVISIONS WHICH WERE NEVER ALLOWABLE TO THE ASSESSEE. 5. WE HAVE CAREFULLY HEARD THE RIVAL SUBMISSIONS AN D PERUSED RELEVANT MATERIAL ON RECORD INCLUDING DOCUMENTS PLA CED IN THE PAPER- BOOK. WE FIND THAT THE MAJOR ADDITION AGAINST WHICH THE P ENALTY HAS BEEN IMPOSED IS PROVISION FOR DOUBTFUL DEBTS. UPON PERUSAL OF FINANCIAL STATEMENTS, IT IS NOTED THAT THE SAID ITEM WAS SEPA RATELY CLAIMED & DISCLOSED BY THE ASSESSEE IN THE PROFIT & LOSS ACCOUNT UNDER SCHEDULE- 9 AS WELL AS IN THE BALANCE SHEET UNDER SCHEDULE-7. FURTHER ACCUMULATED PROVISION FOR DOUBTFUL DEBTS HAS BEEN W RITTEN-BACK BY THE ASSESSEE DURING FINANCIAL YEAR 2005-06. THEREFORE, WE FIND FORCE IN THE PLEA THAT THE AFORE-SAID ITEM WAS INADVERTENTLY OMI TTED TO BE ADDED BACK IN THE COMPUTATION OF INCOME AND THE ASSESSEES EXP LANATION, IN THIS REGARD, IS PLAUSIBLE ONE. THIS IS FORTIFIED BY THE FACT THAT THE ASSESSEE DID NOT CONTEST THE SAME AFTER ADJUDICATION BY LD. CIT( A) AND SECONDLY, THE ASSESSEE WAS CONSTANT LOSS MAKING ENTITY AND HAD NO COMPELLING CIRCUMSTANCES TO MAKE FALSE CLAIM OF EXPENDITURE. T HEREFORE, THE FACTUAL MATRIX DOES NOT JUSTIFY IMPOSITION OF PENALTY. THE NATURE OF OTHER ADDITIONS VIZ. ADHOC DISALLOWANCE OF HOTEL MANAGEMENT FEES AND DISALLOWANCE ON ACCOUNT OF LATE PAYMENT OF ESIC, IN ANY WAY, DO NOT AMOUNT TO CONCEALMENT OR FURNISHING OF INACCURATE P ARTICULARS OF INCOME ITA NO. 243/MUM/2017 & CO NO. 210/MUM/2018 M/S V.HOTELS LIMITED ASSESSMENT YEAR-2005-06 5 AND THEREFORE, DO NOT CALL FOR IMPOSITION OF PENALT Y. HENCE, WE FIND NO REASON TO INTERFERE WITH IMPUGNED ORDER AND DISMISS THE REVENUES APPEAL WHICH MAKES ASSESSEES CROSS-OBJECTIONS INFRUCTUOUS. 6. RESULTANTLY, THE APPEAL AS WELL AS CROSS-OBJECTI ONS STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH NOVEMBER, 2018. SD/- SD/- (JOGINDER SINGH) (MAN OJ KUMAR AGGARWAL) / VICE PRESIDENT / ACCOUNTANT MEMBER MUMBAI; DATED : 16.11.2018 SR.PS:-JAISY VARGHESE / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. $ ( ) / THE CIT(A) 4. $ / CIT CONCERNED 5. #% &###' , #' , / DR, ITAT, MUMBAI 6. & ()* / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.