THE ACIT-3(1), Indore V. M/S. MASHAL HOTEL PVT. LTD., Indore

ITA 619/IND/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2300 (ITAT-INDORE)
• Duration Of Justice: 2 year(s) 6 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2018
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 07-06-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 20-08-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V J BORICHA
• Keywords: Reopening of assessment; Unexplained investment; Depreciation; Corroborative evidences; Valuation report; Reassessment proceedings; Capital expenditure
• Section: 143(3); 147; 69; 148

Judgement Text

MASHAL HOTELS PVT. LTD ITA NOS.618 TO 620 & CO 3 TO 5/IND/2016 1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI KUL BHARAT, HONBLE JUDICIAL MEMBER AND SHRI MANISH BORAD, HONBLE ACCOUNTANT MEM BER ITA NOS.618,619 & 620/IND/2015 A.YS. 2008-09 TO 2010-11 ACIT 3(1) INDORE ::: APPELLANT VS M/S MASHAL HOTELS PVT. LTD. INDORE ::: RESPONDENT CO NOS. 3 TO 5/IND/2016 ARISING OUT OF ITA NOS. 618 TO 620/IND/2015 M/S MASHAL HOTELS PVT. LTD. INDORE ::: OBJECTOR VS ACIT 3(1) INDORE ::: RESPONDENT APPELLANT BY SHRI V.J. BORICHA RESPONDENT BY SHRI PRAKASH JAIN DATE OF HEARING 6.2.201 8 DATE OF PRONOUNCEMENT 2 8 .2.201 8 MASHAL HOTELS PVT. LTD ITA NOS.618 TO 620 & CO 3 TO 5/IND/2016 2 O R D E R PER BENCH THE REVENUE HAS PREFERRED APPEALS FOR THE ASSESSMENT YEARS 2008-09 TO 2010-11 WHEREAS THE ASSESSEE HAS PREFERRED CROSS OBJECTIONS AGAINST THE CONSOLIDATED ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-I, INDORE, DATED 22.6.2015. 2. FOR THE SAKE OF CONVENIENCE, WE WOULD LIKE TO DIS POSE OF THESE APPEALS AND CROSS OBJECTIONS BY THIS CONSOLIDATED ORDER AS THE ISSUES RAISED ARE MOSTLY COMMON. 3. BRIEFLY STATED, THE FACTS, AS CULLED OUT FROM RECOR D, ARE THAT THAT ASSESSEE IS A PRIVATE LIMITED COMPANY AND IS ENGAGED IN THE HOTEL BUSINESS. THE ASSESSMENT FOR TH E ASSESSMENT YEAR 2010-11 IS COMPLETED U/S 143(3) OF TH E ACT ON 25.3.2013 ASSESSING THE INCOME AT NIL. DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR THE ASSESSMENT Y EAR MASHAL HOTELS PVT. LTD ITA NOS.618 TO 620 & CO 3 TO 5/IND/2016 3 2010-11 THE ASSESSING OFFICER NOTICED THAT THE ASSESS EE RECONSTRUCTED ITS HOTEL BUILDING AND HE WAS OF THE VI EW THAT THE ASSESSEE HAS NOT DISCLOSED THE CORRECT INVESTMENT IN CONSTRUCTION OF HOTEL BUILDING IN ITS RETURN OF INC OME. REFERENCE WAS ACCORDINGLY MADE TO THE DEPARTMENTAL VALUATION OFFICER. HOWEVER, SINCE THE REPORT OF THE DEPARTMENTAL VALUATION OFFICER WAS NOT RECEIVED TILL THE DATE OF ASSESSMENT, NO ACTION WAS CONSIDERED PROPER BY THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT U/ S 143(3) OF THE ACT FOR THE ASSESSMENT YEAR 2010-11. HOWEVER, THE ASSESSING OFFICER PUT AN OFFICE NOTE T HAT AFTER RECEIVING THE REPORT OF THE DEPARTMENTAL VALUATION OFFI CER, IF ANY DISCREPANCY IS NOTICED, APPROPRIATE ACTION WOULD BE TAKEN. THE REPORT OF THE DEPARTMENTAL VALUATION OFFICER WAS RECEIVED ON 28.3.2013. IN THE SAID REPORT, INVES TMENT IN THE HOTEL BUILDING AS PER THE DEPARTMENTAL VALUATION MASHAL HOTELS PVT. LTD ITA NOS.618 TO 620 & CO 3 TO 5/IND/2016 4 OFFICER FOR FOLLOWING THREE ASSESSMENT YEARS WAS VALUE D AS FOLLOWS :- A.Y. INVESTMENT AS PER IT RETURN INVESTMENT AS PER DVO DIFFERENCE 2008 - 09 78,47,545 1,59,55,673 81,08,128 2009 - 10 1,38,33,563 2,92,49,262 1,54,15,699 2010 - 11 38,76,002 84,54,282 45,78,280 4. ON THE BASIS OF ABOVE INFORMATION, THE ASSESSING OF FICER REOPENED THE ASSESSMENTS FOR THESE THREE ASSESSMENT YEARS ISSUING NOTICES U/S 148 OF THE ACT AND COMPLETED THE ASSESSMENTS AFTER MAKING THE ADDITIONS FOR UNACCOUNTED INVESTMENTS IN THE HOTEL BUILDING U/S 69 OF THE ACT AT RS. 81,08,128/-, RS. 1,54,15,699/- AND RS. 45,66,280/- F OR THE ASSESSMENT YEAR 2008-09, 2009-10 AND 2010-11, RESPECTIVELY. THE LEARNED ASSESSING OFFICER ALSO MAD E THE DISALLOWANCE OF INTEREST U/S 36(1)(III) OF THE ACT AT RS. MASHAL HOTELS PVT. LTD ITA NOS.618 TO 620 & CO 3 TO 5/IND/2016 5 12,87,371/- TREATING THE INTEREST AS CAPITAL EXPENDITU RE TO BE CAPITALISED WITH THE ASSETS. 5. AGGRIEVED, THE ASSESSEE PREFERRED APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) CHALLENGING REOPENING OF ASSESSMENTS FOR ALL THESE YEARS AND ALSO CHALLENGING THE ADDITIONS/DISALLOWANCES MADE BY THE ASSESSING OFFICER. THE COMMISSIONER OF INCOME TAX (APPEALS) ALLOWED THE ASSESSEES GROUNDS CHALLENGING REOPENING OF ASSESSMENTS OBSERVING THAT REFERENCE MADE TO DEPARTMENTAL VALUATION OFFICER IN ORDER TO DETERMINE TH E COST OF CONSTRUCTION/EXPANSION OF HOTEL BUILDING WIT HOUT ANY EVIDENCE AND WITHOUT REJECTING THE BOOKS OF ACCOUN TS WAS NOT TENABLE IN LAW. THE COMMISSIONER OF INCOME TA X (APPEALS) FURTHER GAVE A FINDING THAT THE REOPENING OF ASSESSMENT MERELY ON THE BASIS OF VALUATION REPORT OF DEPARTMENTAL VALUATION OFFICER IS NOT SUSTAINABLE IN LAW. THE COMMISSIONER OF INCOME TAX (APPEALS) ACCORDINGLY MASHAL HOTELS PVT. LTD ITA NOS.618 TO 620 & CO 3 TO 5/IND/2016 6 QUASHED THE RE-ASSESSMENT PROCEEDINGS ALLOWING THE ASSESSEES LEGAL GROUND. AS REGARDS THE GROUNDS RAISED BY THE ASSESSEE ON MERITS, THE COMMISSIONER OF INCOME T AX (APPEALS) DISMISSED THE GROUNDS BEING INFRUCTUOUS. NOW THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) AND THE ASSESSEE HAS RAISED CROSS OBJECTIONS. THE REVENUE HAS RAISED COMMON ISSUES CHALLENGING THE FINDINGS OF THE COMMISSIONER OF INCOME TAX (APPEALS) QUASHING THE REASSESSMENT PROCEEDINGS AND DELETING THE ADDITION FO R UNACCOUNTED INVESTMENT IN THE HOTEL BUILDING. 6. ON THE OTHER HAND, THE ASSESSEE HAS RAISED CR OSS OBJECTION AGAINST THE ORDER OF THE COMMISSIONER OF IN COME TAX (APPEALS) FOR NOT DECIDING GROUND NOS. 2.1 TO 2. 3 CHALLENGING THE REASSESSMENT PROCEEDINGS AND FOR THE ASSESSMENT YEAR 2010-11 HAS CHALLENGED THE ORDER OF TH E COMMISSIONER OF INCOME TAX (APPEALS) CONFIRMING THE MASHAL HOTELS PVT. LTD ITA NOS.618 TO 620 & CO 3 TO 5/IND/2016 7 DISALLOWANCE OF INTEREST OF RS. 12,87,371/- TREATING I T AS CAPITAL EXPENDITURE. 7. AT THE OUTSET, THE LEARNED COUNSEL FOR THE ASSESS EE PRAYED FOR NOT PRESSING THE GROUNDS RELATING TO REASSESSMENT PROCEEDINGS AND ACCORDINGLY WE DISMISS TH E COMMON GROUNDS RAISED IN GROUND NOS. 1 OF CROSS OBJE CTION FOR THE THREE YEARS BEING NOT PRESSED. 8. NOW WE TAKE THE APPEALS OF THE REVENUE. THE FIRS T COMMON ISSUE RELATES TO QUASHING THE REASSESSMENT PROCEEDINGS BY THE COMMISSIONER OF INCOME TAX (APPE ALS) RELYING ON THE DECISION OF HON'BLE APEX COURT IN TH E CASE OF DHARIA CONSTRUCTION COMPANY; 228 ITR 515 WHEREIN IT HAS BEEN HELD THAT REOPENING OF ASSESSMENT MERELY ON THE BASIS OF VALUATION REPORT OF DEPARTMENTAL VALUATION OFFICE R IS NOT SUSTAINABLE IN LAW BECAUSE THE OPINION GIVEN BY THE DEPARTMENTAL VALUATION OFFICER IS NOT PER SE INFORMATION FOR THE PURPOSE OF REOPENING OF ASSESSMENT U/S 147 O F THE MASHAL HOTELS PVT. LTD ITA NOS.618 TO 620 & CO 3 TO 5/IND/2016 8 ACT. THE LEARNED COUNSEL FOR THE ASSESSEE REFERRED T O AND RELIED UPON THE FINDINGS OF THE COMMISSIONER OF INC OME TAX (APPEALS) WHEREAS THE LEARNED DR SUBMITTED THAT THE REOPENING WAS CORRECTLY MADE AFTER DUE APPLICATION OF MI ND BY THE ASSESSING OFFICER. 9. WE HAVE HEARD BOTH THE SIDES AND CAREFULLY PERUSED THE MATERIAL AVAILABLE ON RECORD OF THE TRIBUNAL, INTER ALIA, IMPUGNED ASSESSMENT ORDER, ORDER OF THE LEARNED CIT(A ) ALONGWITH PAPER BOOK FILED BY THE ASSESSEE. THE ISSUE WHICH NEEDS OUR ADJUDICATION IS WHETHER THE REOPENING OF ASSESSMENT PROCEEDINGS FOR ALL THESE YEARS AND ISSUAN CE OF NOTICE U/S 148 OF THE ACT WAS VALID. WE OBSERVE THAT D URING THE COURSE OF ASSESSMENT PROCEEDINGS FOR THE ASSESSME NT YEAR 2010-11 ITSELF THE ASSESSING OFFICER TOOK UP TH E ISSUE ABOUT THE INVESTMENT IN HOTEL BUILDING AND IN ORDER TO QUANTIFY THE ISSUE WITH SUPPORTING EVIDENCE, HE REFER RED THE MATTER TO THE DEPARTMENTAL VALUATION OFFICER FOR VALUATION MASHAL HOTELS PVT. LTD ITA NOS.618 TO 620 & CO 3 TO 5/IND/2016 9 OF THE CORRECT INVESTMENT MADE IN ALL THESE YEARS IN THE HOTEL BUILDING. THIS IS NOT THE CASE OF THE ASSESSEE THAT AFTER COMPLETION OF ASSESSMENT PROCEEDINGS, THE CASES FOR THESE THREE YEARS WERE REOPENED MERELY ON THE BASIS O F DEPARTMENTAL VALUATION OFFICER REPORT. THE FACT IS THAT THE ASSESSING OFFICER WAS VERY MUCH AWARE OF THE ISSUE BU T DUE TO STATUTORY TIME LIMIT FOR COMPLETION OF ASSESSM ENT U/S 143(3) OF THE ACT WHICH WAS APPROACHING NEARBY AND THE REPORT OF DEPARTMENTAL VALUATION OFFICER WAS AWAITED , HE HAD NO OPTION BUT TO FINALISE THE ASSESSMENT U/S 14 3(3) OF THE ACT BUT ON THE DATE OF COMPLETING THE ASSESSME NT, THE APPLICATION FOR ASCERTAINING THE CORRECT INVESTMENT WAS MADE TO THE DEPARTMENTAL VALUATION OFFICER. THE DATE OF COMPLETION OF ASSESSMENT PROCEEDINGS FOR THE ASSESSME NT YEAR 2010-11 WAS 25.3.2013 AND JUST AFTER 5 DAYS THE REPORT FROM DEPARTMENTAL VALUATION OFFICER WAS RECEIVED ON 28.3.2013 SHOWING THAT THE INVESTMENT MADE IN THE HO TEL MASHAL HOTELS PVT. LTD ITA NOS.618 TO 620 & CO 3 TO 5/IND/2016 10 BUILDING WAS MUCH MORE THAN THE INVESTMENT SHOWN BY T HE ASSESSEE IN THE INCOME TAX RETURN. THE FACTS OF THE JUDGMENT RELIED UPON BY THE ASSESSEE AS WELL AS BY THE COMMISSIONER OF INCOME TAX (APPEALS) ARE DIFFERENT TH AN THE FACTS OF THE INSTANT APPEALS. IF THE REOPENING HAS BEEN MADE ON THE BASIS OF ANY OTHER INDEPENDENT INFORMATION RECEIVED FROM THE DEPARTMENTAL VALUATION OFFICER AFTER T HE COMPLETION OF ASSESSMENT U/S 143(3), THE CASE WOULD HAVE BEEN DIFFERENT BUT IN THE INSTANT CASE THE ASSESSING OFFICER MADE PROPER APPLICATION OF MIND DURING THE ASSESSMENT PROCEEDINGS ITSELF AND IF THE HURDLE OF COMPLETING T HE ASSESSMENT AS PER THE STATUTORY TIME LIMIT PROVIDED IN THE ACT WOULD NOT HAVE BEEN THERE, THEN THE ASSESSING OF FICER WOULD HAVE WAITED FOR THE DEPARTMENTAL VALUATION OFFICER REPORT AND ACCORDINGLY MADE THE ADDITIONS IN THE REGULAR ASSESSMENT PROCEEDINGS. WE, THEREFORE, IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE, ARE OF THE CONSIDERED MASHAL HOTELS PVT. LTD ITA NOS.618 TO 620 & CO 3 TO 5/IND/2016 11 OPINION THAT THE ISSUANCE OF NOTICE U/S 148 OF THE AC T AS WELL AS REASSESSMENT PROCEEDINGS ARE VALID. 10. IN THE RESULT, THIS COMMON LEGAL GROUND RAISE D BY THE REVENUE FOR ALL THESE YEARS IS ALLOWED. 11. NOW MOVING TO REVENUES SECOND COMMON GROUND WHICH CHALLENGES THE DELETION OF ADDITION FOR UNACCOUN TED INVESTMENTS OF RS.81,08,128/-, RS. 1,54,15,699/- AND RS.45,78,280/-, WE OBSERVE THAT DURING THE COURSE OF APPELLATE PROCEEDINGS THE ASSESSEE REFERRED FOLLOWING ARITHMETICAL AND MEASUREMENT DEFECTS ALLEGEDLY MADE BY THE DEPARTMENTAL VALUATION OFFICER WHILE MAKING THE VALUATION REPORT:- 4.6] THAT THE REPORT OF THE DVO SUFFERS FROM VARIO US ARITHMETICAL AND MEASUREMENT MISTAKES. THAT MAJOR DEFECTS AS POINTED OUT ARE AS UNDER-: S. NO. PARTICULARS 1 AS PER DVO QUANTITY OF PAVER TILES IS 1288 SQ.MT BUT ON ACTUAL MEASUREMENT IT IS FOUND AT 570 SQ.MT. AS PER DVO WOODEN FLOORING IS 266 SQ.MT BUT ON ACT UAL SAME IS 61 SQ.MT. THERE IS A TOTALING MISTAKE FOR FALL CELLING WORK THE DVO HAS WORKS OUT AT RS. 10,50,878/- WHILE THE CORRECT TOTAL WORKS OUT TO RS . 10,40,600/- . THE AREA OF TOUGHENED GLASS WORK IS TAKEN BY DVO A T 494 SQ.MT BUT IN FACT THE SAME IS 300 SQ.MT. MASHAL HOTELS PVT. LTD ITA NOS.618 TO 620 & CO 3 TO 5/IND/2016 12 THE DVO HAS TAKEN FOUR BOREWELLS WHILE IN FACT THE RE IS ONLY ONE BOREWELL WHICH IS ALSO QUITE OLD AND IN ACTIVE SINCE LAST 15 YEARS. THE RATE APPLIED BY THE DVO AT VERY HIGHER SIDE AN D IN RESPECT OF CONSTRUCTION OF NEW BUILDING AS AGAINST THE REPAIRS AND RENOVATI ON IN EXISTING BUILDING IS CARRIED BY THE COMPANY. THE RATE APPLIED IS ALSO TH E RATE OF CPWD ,DELHI WHILE THE PROPERTY IS SITUATED IN A SMALL VILLAGE RAU WHE RE THE RATE ARE ABOUT 30% CHEAPER IN COMPUTATION TO DELHI . MOREVER WE COULD NOT UNDERSTAND WHY THE DVO HAS APPLIED THE RATE OF CPWD, DELHI PARTICULARL Y WHEN THE RATE OF PWD M.P. IS AVAILABLE. THE DVO HAS NOT PROVIDED IN HIS REPORT DETAIL OF C OST INDEX ADOPTED AND RATE ADOPTED. MOREVER HE HAS NOT GIVEN ANY ANALYSIS OF C ONSTRUCTION WORK WHICH HE ANALYZED . THE DVO HAS CONSIDERED THE FOLLOWING OLD WORK AS C ONSTRUCTED DURING THE PERIOD OF REPAIR AND RENOVATION WHILE THESE WORKS W ERE ALREADY EXIST WHEN HOTEL WAS ORIGINALLY CONSTRUCTED:- BASE STRUCTURE INTACT PLASTER COMPOUND WALL WOODEN FLOORING SPETIC TANK SWIMMING POOL FISH POND U.G.SUMP R.C..TANK DECORATIVE BRIDGE NEAR FISH POND R.C.C. RETAINING WALL BOREWELL. IN SUPPORT OF OUR CONTENTION THAT THESE WORKS WERE CONSTRUCTED LONG BACK WHEN HOTEL WAS ORIGINALLY CONSTRUCTED KINDLY ALLOW TIME TO FILE OLD PHOTOGRAPHS. THE ELECTRICAL , WATER AND DRAINAGE LINE WERE ALRE ADY EXIST WHEN THE HOTEL WAS ORIGINALLY CONSTRUCTED AND THE COMPANY HAS NOT DEMO LISHED THE SAME , THUS NO EXPENDITURE IS INCURRED FOR LAYING ELECTRICAL , WAT ER AND DRAINAGE LINE WHILE THE CPWD RATES INCLUDES THE COST OF THESE ITEMS ALSO. THE DVO HAS ADOPTED DSR RATES WITHOUT GIVING CONSI DERATION TO THE ACTUAL BILLS AND WITHOUT KEEPING IN MIND THAT DSR RATES ARE FIND OUT ONLY TO PREPARE ESTIMATE FOR THE PURPOSE OF MAKING PROVISION IN THE STATE BUDGET FOR SANCTIONING THE FUNDS REQUIRED FOR CONSTRUCTION OF GOVERNMENT BUILDINGS ETC, AND THE STATE /GOVERNMENT DEPARTMENT NEVER EXECUTE THE WORK ON DSR RATE AND ACTUAL WORK IS EXECUTED BY INVITING THE TENDERS WHICH WERE ALWAYS BELOW THE DSR RATES. MASHAL HOTELS PVT. LTD ITA NOS.618 TO 620 & CO 3 TO 5/IND/2016 13 12. EVEN THOUGH THE ABOVE DEFECTS WERE VERY MUC H PLACED BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS ) BUT HE DID NOT ADJUDICATE ON THE ISSUE OF MERITS BECAU SE HE ALLOWED THE APPEALS BY ALLOWING LEGAL GROUND RAISED BY TH E ASSESSEE CHALLENGING THE REASSESSMENT PROCEEDINGS. TH E COMMISSIONER OF INCOME TAX (APPEALS) MERELY MENTIONE D THAT GROUND NOS. 4 AND 5 OF THE ASSESSEES APPEALS IN TH E ASSESSMENT YEARS 2008-09, 2009-10 AND 2010-11 CHALLENGING THE ADDITIONS MADE BY THE ASSESSING OFF ICER ON THE BASIS OF DEPARTMENTAL VALUATION OFFICER REPORT HAS BECOME INFRUCTUOUS, AS GROUND NO. 3 CHALLENGING THE REASSESSMENT PROCEEDINGS HAS BEEN ALLOWED. 13. FROM THE PERUSAL OF THE ORDER OF THE COMMI SSIONER OF INCOME TAX (APPEALS) IT IS CLEAR THAT NO FINDING H AS BEEN GIVEN ON MERITS OF THE CASE NOR THE OBJECTIONS RAISED BY THE ASSESSEE CHALLENGING THE VALUATION GIVEN BY THE DEPARTMENTAL VALUATION OFFICER HAVE BEEN CONSIDERED. WE , MASHAL HOTELS PVT. LTD ITA NOS.618 TO 620 & CO 3 TO 5/IND/2016 14 THEREFORE, SET ASIDE THE ISSUE TO THE FILE OF THE COMMISSIONER OF INCOME TAX (APPEALS) FOR DE NOVO ADJUDICATION AFTER CONSIDERING THE OBJECTIONS RAISED BY THE ASSESSEE IN THE DEPARTMENTAL VALUATION OFFICER REPORT CONTENDING THAT VARIOUS ARITHMETICAL AND MEASUREMENT DEFECTS EXIST. NEEDLESS TO MENTION THAT PROPER OPPO RTUNITY OF HEARING BE AFFORDED TO THE ASSESSEE AND IF REQUIRED, A FRESH DEPARTMENTAL VALUATION OFFICER REPORT MAY BE OBTAINED CONSIDERING THE OBJECTIONS OF THE ASSESSEE ENUMERATED ABOVE. 14. IN THE RESULT, THIS COMMON ISSUE FOR THREE ASS ESSMENT YEARS ON MERITS CHALLENGING THE ADDITIONS FOR UNACCOUNT ED INVESTMENT IN RECONSTRTUCTION/RENOVATION OF HOTEL BU ILDING IS ALLOWED FOR STATISTICAL PURPOSES. 15. NOW WE TAKE GROUND NO. 2 RAISED BY THE ASSESSEE IN CROSS OBJECTION FOR THE ASSESSMENT YEAR 2010-11 THER EBY CHALLENGING THE ORDER OF THE COMMISSIONER OF INCOME TAX MASHAL HOTELS PVT. LTD ITA NOS.618 TO 620 & CO 3 TO 5/IND/2016 15 (APPEALS) CONFIRMING THE ACTION OF THE ASSESSING OFFI CER FOR MAKING THE DISALLOWANCE OF RS. 12,87,371/- U/S 36(1)(I II) OF THE ACT FOR THE INTEREST PAID ON RENOVATION OF BUILDI NG. 16. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE FIND TH AT THE ASSESSEE HAS MADE SUBSTANTIAL INVESTMENT IN CONSTRUCTION OF HOTEL BUILDING AND THE AMOUNT SHOWN BY THE ASSESSEE IN THE AUDITED ACCOUNTS IS RS. 78,47,545/-,RS. 1,38,37,5 63/- AND RS. 38,76,002/- FOR THE THREE ASSESSMENT YEARS. CERTAINLY SUCH AMOUNTS CANNOT BE CATEGORISED AS MERELY REPAIR AND RENOVATION CHARGES RATHER THEY ARE IN THE SHAPE OF EXPANSION OF HOTEL. WE, THEREFORE, FIND NO INFIRM ITY IN THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) TR EATING THE INTEREST EXPENDITURE OF RS. 12,87,371/- AS CAPI TAL EXPENDITURE TO BE ADDED TO THE COST OF ASSETS ELIGIBL E FOR DEPRECIATION. ACCORDINGLY, GROUND NO. 2 OF CROSS OBJ ECTION FOR THE ASSESSMENT YEAR 2010-11 IS DISMISSED. MASHAL HOTELS PVT. LTD ITA NOS.618 TO 620 & CO 3 TO 5/IND/2016 16 17. IN THE RESULT, THE APPEALS OF THE REVENUE ARE PART LY ALLOWED FOR STATISTICAL PURPOSES AND CROSS OBJECTIONS O F THE ASSESSEE ARE DISMISSED. PRONOUNCED IN OPEN COURT ON 28 FEBRUARY, 2018. SD SD (KUL BHARAT) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER 28 TH FEBRUARY, 2018 DN/- COPY TO APPELLANT/RESPODENT/PR.CIT/CIT(A)/DR/GUAR D FILE