Appeal details
Counselvise Citation
[2021] 107 COUNSELVISE.COM (IT) 6490 (ITAT-DELHI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
4 year(s) 2 month(s) 7 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
10-09-2021
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
G
Assessment Year
2012-2013
Appeal Filed On
03-07-2017
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G NEW DLEHI BEFORE SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER AND SHRI K. NARASIMHA CHARY, JUDICIAL MEMBER ITA NO. 4387/DEL/2017 ASSESSMENT YEAR: 2012-13 ACIT, CIRCLE-25(2), VS. TULIP STAR HOTEL LTD., NEW DELHI. KAMAL CINEMA COMMERCIAL COMPLEX, BLOCK A & B, SUFDARJUNG ENCLAVE, NEW DELHI. PAN : AAACC1072F (APPELLANT) (RESPONDENT) APPELLANT BY : SH. PRAKASH DUBEY, SR. DR RESPONDENT BY: SH. PRATAP GUPTA, C.A. DATE OF HEARING: 25.08.2021 DATE OF ORDER : 10.09.2021 ORDER PER K. NARASIMHA CHARY, J.M. AGGRIEVED BY THE ORDER DATED 10.03.2017 PASSED BY T HE COMMISSIONER OF INCOME TAX (APPEALS)-13, NEW DELHI ('LD. CIT(A)' ) IN THE CASES OF TULIP STAR HOTEL LTD.(THE ASSESSEE) FOR THE ASSESSMENT YEAR 2012-13, REVENUE PREFERRED THIS APPEAL. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A COMPANY AND WAS ENGAGED IN THE BUSINESS OF OWNING AND MANAGING THE HOTELS IN INDIA AT THE RELEVANT PERIOD. ASSESSEE FILED RETURN OF INCOME FO R THE ASSESSMENT YEAR 2012-13 ON 27.09.2012 DECLARING A LOSS OF RS.71,37, 326/-. DURING THE COURSE 2 OF ASSESSMENT, LEARNED ASSESSING OFFICER NOTICED TH AT THE ASSESSEE CLAIMED EXPENSES AMOUNTING TO RS.3,61,28,155/- AND WHEN CAL LED UPON TO EXPLAIN WHY THE SAME SHALL NOT BE DISALLOWED IN VIEW OF THE FACT THAT NO BUSINESS ACTIVITY WAS CARRIED OUT DURING THE ASSESSMENT YEAR , THE ASSESSEE PLEADED THAT OUT OF EXPENSES OF RS.3,61,28,155/- APPEARING IN PROFIT & LOSS ACCOUNT, THE EXPENSES TO THE TUNE OF RS.2,90,35,248/- WERE SUO MOTO ADDED BACK BY THE ASSESSEE IN ITS COMPUTATION OF INCOME AND, THER EFORE, IN FACT, THE ASSESSEE CLAIMED EXPENSES ONLY TO THE TUNE OF RS.70 ,92,907/- FOR RETAINING ITS STATUS AS A COMPANY AND FOR ITS CONTINUOUS EXISTENC E FOR RUNNING THE DAY-TO- DAY AFFAIRS OF THE COMPANY. ACCORDING TO THE ASSESS EE, SAME INCLUDES EXPENSES LIKE SALARY, PAYMENT TOWARDS STATUTORY FUN DS, TRAVELLING AND CONVEYANCE, COMMUNICATION, PROFESSIONAL FEE, VEHICL ES ETC. LEARNED ASSESSING OFFICER, HOWEVER, DID NOT AGREE WITH THE SUBMISSIONS OF THE ASSESSEE AND DISALLOWED THE ENTIRE EXPENSES OF RS.3 ,64,03,451/- DEBITED TO THE PROFIT AND LOSS ACCOUNT AND ASSESSED THE INCOME OF THE ASSESSEE AT NIL. 3. AGGRIEVED BY THE SAME, ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A) WHO BY ORDER DATED 10.03.2017 DELETED THE DI SALLOWANCE OF EXPENSES HOLDING THAT THESE EXPENSES WERE REQUIRED TO BE INC URRED FOR RETAINING THE STATUS OF THE COMPANY AND ALLOWABLE DEDUCTION EVEN THOUGH NO BUSINESS ACTIVITY WAS CARRIED OUT IN THE RELEVANT YEAR. IN T HIS PROCESS, LD. CIT(A) PLACED RELIANCE ON THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT INTEGRATED TECHNOLOGIES LTD. (ITA NO.530/2011 ORD ER DATED 16.12.2011) AND THE VIEW OF THE ITAT IN THE CASE OF ITO VS. MOK UL FINANCE PVT. LTD., 110 TTJ 445. 4. REVENUE, THEREFORE, AGGRIEVED BY SUCH DELETION O F THE DISALLOWANCE CAME IN THIS APPEAL CONTENDING THAT THE ASSESSEE HA D PAID TO THE 3 COLLABORATORS FOR EXPENSES ON SERVICES/PREMISES WHI CH ARE CLEARLY COVERED UNDER THE AMBIT OF TDS PROVISIONS AND THAT THE ASSE SSEE DID NOT FORM ANY PARTNERSHIP FIRM WITH ANY OF THE COLLABORATORS AND ACCORDINGLY, PAYMENTS MADE TO THEM/REVENUE SHARED WITH THEM CANNOT BE TRE ATED AS SHARE OF PROFITS IN THE ABSENCE OF PARTNERSHIP FIRM. LEARNED DR PLACES RELIANCE ON THE ORDERS OF THE AUTHORITIES BELOW. 5. IT IS SUBMITTED ON BEHALF OF THE ASSESSEE THAT T HE GROUNDS RAISED HAVE NO RELATION TO THE DELETION OF THE DISALLOWANCE AND THE LD. CIT(A) RIGHTLY FOLLOWED THE LAW LAID DOWN BY HONBLE JURISDICTIONA L HIGH COURT IN THE CASE OF INTEGRATED TECHNOLOGIES LTD. (SUPRA) AND THEREFORE, NO INTERFERENCE IS WARRANTED. 6. WE HAVE GONE THROUGH THE RECORD IN THE LIGHT OF THE SUBMISSIONS MADE ON EITHER SIDE. IT REMAINS AN UNDISPUTED FACT THAT THE ASSESSEE WAS INCORPORATED ON 10.09.2087, MADE INVESTMENTS IN V. HOTELS LTD, WHICH HAD ACQUIRED CENTAUR HOTEL IN MUMBAI FROM THE GOVERNMEN T INTENDING TO REVIVE THE BUSINESS OF SUCH HOTELS, BUT IN VIEW OF LEGAL D ISPUTE WITH REGARDING TO CENTAUR HOTEL AND ALSO ON ACCOUNT OF ECONOMIC SLOWD OWN, THE ASSESSEE COULD NOT START RUNNING OF HOTEL, BUT, HOWEVER, TO KEEP THE STATUS OF THE COMPANY, THE ASSESSEE HAD TO INCUR EXPENSES IN THE SHAPE OF SALARY OF FEW KEY PERSONNEL, PAYMENTS MADE TOWARDS STATUTORY FUND S, COMMUNICATIONS, PROFESSIONAL FEES ETC. 7. IN THESE CIRCUMSTANCE, LD. CIT(A) WHILE FOLLOWIN G THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF IN TEGRATED TECHNOLOGY LTD. (SUPRA) AND ALSO ORDER OF COORDINATE BENCH OF THIS TRIBUNAL IN MOKUL FINANCE PVT. LTD. (SUPRA), GRANTED RELIEF ON THE GROUND THA T THE EXPENSES INCURRED FOR 4 RETAINING THE STATUS OF THE COMPARE ARE ALLOWABLE D EDUCTION, EVEN THOUGH THE ASSESSEE DID NOT CARRY OUT ANY BUSINESS ACTIVIT Y DURING THE ASSESSMENT YEAR. WE DO NOT FIND ANY ILLEGALITY OR IRREGULARITY IN THE REASONING GIVEN OR CONCLUSIONS REACHED BY THE LD. CIT(A) AND AS A MATT ER OF FACT, THE CHALLENGE OF THE REVENUE ALSO IS NON-SPECIFIC. WE, ACCORDINGLY, UPHOLD THE ORDER OF THE LD. CIT(A) AND DISMISS THE GROUNDS OF APPEAL OF THE REV ENUE. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS THE 10 TH DAY OF SEPTEMBER, 2021. SD/- SD/- ( PRASHANT MAHARISHI) (K. NARSIM HA CHARY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 10/09/2021 AKS
