ACIT 1(1), MUMBAI V. GRAVISS HOSPITALITY LTD, MUMBAI

ITA 6211/MUM/2011

• Counselvise Citation: 621119914 RSA 2011
• Duration Of Justice: 3 year(s) 9 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-06-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 13-04-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 08-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIJAY KUMAR BORA
• Keywords: Capital asset; Business income; Earning of tax free income; Capital receipt; Revised return
• Section: 2(14); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH G , MUMBAI BEFORE SHRI R.C. SHARMA , ACCOUNTANT MEMBER AND SHRI SANJAY GARG , JUDICIAL MEMBER ITA NO. 5693/M/2011 ASSESSMENT YEAR: 2008 - 09 M/S. GRAVISS HOSPITALITY LTD., 135, HOTEL INTERCONTINENTAL, NETA JI SUBHASH ROAD, MARINE DRIVE, MUMBAI 400 001. PAN: AAACT 0048E VS. ADD. CIT, RANGE - 1(1), AAYAKAR BHAVAN, MUMBAI - 400020 (APPELLANT) (RESPONDENT) ITA NO. 6211/M/2011 ASSESSMENT YEAR: 2008 - 09 ACIT - 1(1), ROOM NO.579, AAYAKAR BHAVAN, MUMBAI - 400020 VS. M/S. GRAVISS HOSPITALITY LTD., 135, HOTEL INTERCONTINENTAL, NETAJI SUBHASH ROAD, MARINE DRIVE, MUMBAI 400 001. PAN: AAACT 0048E (APPELLANT) (RES PONDENT) PRESENT FOR: ASSESSEE BY : SHRI VIJAY MEHTA, A.R. REVENUE BY : SHRI VIJAY KUMAR BORA, D.R. DATE OF HEARING : 13.04. 201 5 DATE OF PRONOUNCEMENT : 17.06. 2015 O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THE ABOVE TITLED CROSS APPEALS ONE BY THE ASSESSEE AND THE OTHER BY THE REVENUE HAVE BEEN DIRECTED AGAINST THE ORDER DATED 06.06.2011 OF THE COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS CIT(A)] RELEVANT TO ASSESSMENT YEAR 2008 - 09. SINCE THE FACTS AND ISSUES INVOLVE D THEREIN ARE IDENTICAL IN NATURE, HENCE THE SAME ARE TAKEN TOGETHER FOR DISPOSAL ITA NO.5693/M/2011 & ITA NO.6211/M/2011 M/S. GRAVISS HOSPITALITY LTD. 2 BY THIS COMMON ORDER. FIRST WE TAKE UP ASSESSEES APPEAL I.E. ITA NO.5693/M/2011. ITA NO.5693/M/2011 2. THE ASSESSEE IN ITS APPEAL HAS TAKEN TWO GROUNDS OF APPEAL. AT THE OUTSET, THE LD. A.R. OF THE ASSESSEE HAS STATED AT BAR THAT AS PER THE INSTRUCTIONS OF HIS CLIENT , HE DOES NOT PRESS GROUND NO.1 OF THE APPEAL. GROUND NO.1 IS THEREFORE DISMISSED AS NOT PRESSED. 3. THE ISSUE RAISED VIDE GROUND NO.2 IS RELATING TO THE D ISALLOWANCE MADE UNDER SECTION 14A OF THE INCOME TAX ACT. THE ASSESSEE HAS AGITATED THE ACTION OF THE LD. CIT(A) IN SUSTAINING THE DISALLOWANCE ON ACCOUNT OF ADMINISTRATIVE EXPENSES AT THE RATE OF 0.5% OF THE AVERAGE VALUE OF INVESTMENT AS PER RULE 8D ( 2 ) ( III) AS AGAINST THE SUO - MOTO DISALLOWANCE OF RS. 2 LAKH OFFERED BY THE ASSESSEE. WE MAY OBSERVE THAT THE REVENUE, VIDE GROUND NO.1 OF ITS APPEAL, HAS ALSO AGITATED THE ACTION OF THE LD. CIT(A) IN DELETING THE DISALLOWANCE ON ACCOUNT OF INTEREST EXPENDITURE UNDER RULE 8D(2)(III) OF THE INCOME TAX RULES. 4. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER (HEREINAFTER REFERRED TO AS THE AO) OBSERVED THAT THE ASSESSEE HAD EARNED DIVIDEND INCOME OF RS.3 , 13 , 15 , 384/ - WHICH WAS CLAIMED AS EXEMPT UNDER S ECTION 10(34) OF THE ACT. HE FURTHER OBSERVED THAT THE ASSESSEE HAD DISALLOWED ONLY A SUM OF RS.2 LAKH. THE AO APPLIED RULE 8D AND DISALLOWED A SUM OF RS.61 , 45 , 777/ - UNDER RULE 8D(2) (II) ON ACCOUNT OF INTEREST EXPENDITURE AND FURTHER A SUM OF RS.18 , 32 , 98 0/ - ON ACCOUNT OF ADMINISTRATIVE EXPENSES UNDER RULE 8D(2)(III). AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A). ITA NO.5693/M/2011 & ITA NO.6211/M/2011 M/S. GRAVISS HOSPITALITY LTD. 3 5. IT WAS CONTENDED BY THE ASSESSEE BEFORE THE LD. CIT(A) THAT THE AO HAD NOT RECORDED HIS DISSATISF ACTION RELATING TO THE WORKING OF SUO - MOTO DISALL O WA NCE OF RS. 2 LAKH OFFERED BY THE ASSESSEE. THE AO HAD STRAIGHTWAY APPLIED RULE 8D OF THE ACT. IT HAD ALSO BEEN CONTENDED THAT THE ASSESSEE HAD NOT INCURRED ANY DIRECT, INDIRECT OR ANY OTHER ADMINISTRATIV E EXPENSES FOR EARNING OF EXEMPT INCOME. THE SUO - MOTO DISALLOWANCE OF RS.2 LAKH OFFERED BY THE ASSESSEE WAS REASONABLE. THE ASSESSEE ALSO DEMONSTRATED AND EXPLAINED BEFORE THE CIT(A) THE ONE TO ONE RELATION OF THE BORROWED FUNDS AND THEIR UTILIZATION TOW ARDS BUSINESS OF THE ASSESSEE TO PROVE THAT T HE INTEREST OF RS.3,99,96,656/ - W AS INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE AND THAT THE SAME CANNOT BE CONSIDERED FOR DISALLOWANCE U/S 14A. THE ASSESSEE FURTHER SUBMITTED THA T THE ADMINISTRATIVE EXPENSES INCURRED BY THE COMPANY WERE FOR CARRYING ON ITS HOSPITALITY BUSINESS ACTIVITY AND NO PART OF TH OSE EXPENSES COULD BE CONSIDERED AS RELATABLE TO EARNING OF EXEMPTED INCOME. THE LD. AR FURTHER SUBMITTED THAT ALL THE INVESTMENTS WERE MADE OUT OF OWN FUNDS. THAT THE ASSESSEE HAD ISSUED FRESH EQUITY SHARES TO THE SHAREHOLDERS AT A PREMIUM FOR OPENING NEW HOTELS AND BANQUET HALLS, HOWEVER, THE FUNDS WHICH WERE LYING IDLE TILL THE PROJECT WAS COMPLETE WERE INVESTED IN M UTUAL F UNDS WH ICH YIELDED DIVIDEND. 6. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE LD. CIT(A) OBSERVED THAT THE AO HIMSELF HAD NOT MADE ANY DISALLOWANCE RELATING TO ANY DIRECT EXPENDITURE FOR EARNING OF EXEMPT INCOME. THE LD. CIT(A) ALSO AGREED TO THE CON TENTION OF THE ASSESSEE THAT INDIRECT EXPENSES E.G. INTEREST EXPENDITURE HAD NOT BEEN INCURRED BY THE ASSESSEE FOR EARNING OF DIVIDEND INCOME. HE THEREFORE DELETED THE DISALLOWANCE MADE BY THE AO UNDER RULE 8D(2)(II) IN RELATION TO INTEREST EXPENDITURE. THE LD. CIT(A), HOWEVER, OBSERVED THAT RULE 8D WAS APPLICABLE FOR THE ASSESSMENT YEAR IN QUESTION IN VIEW OF THE DECISION ITA NO.5693/M/2011 & ITA NO.6211/M/2011 M/S. GRAVISS HOSPITALITY LTD. 4 OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF GODREJ & BOYCE MANUFACTURING CO. LTD. VS. DCIT [(2010) 328 ITR 81 (BOM)] . HE THEREF ORE UPHELD THE ACTION OF THE AO IN RELATION TO DISALLOWANCE MADE BY HIM UNDER RULE 8D(2)(III) AND CONFIRMED THE DISALLOWANCE OF RS.18,32,980/ - ON ACCOUNT OF ADMINISTRATIVE EXPENSES. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE ASSESSEE HAS AGITATED THE S USTAINING OF THE DISALLOWANCE UNDER RULE 8D(2)(II I ) WHEREAS THE REVENUE HAS AGITATED THE ACTION OF THE LD. CIT(A) IN DELETING THE DISALLOWANCE MADE BY THE AO UNDER RULE 8D(2)(II). 7. WE HAVE HEARD THE RIVAL CONTENTIONS OF THE LD. REPRESENTATIVES OF BOTH THE PARTIES AND HAVE ALSO GONE THROUGH THE RECORDS. T HE LD. CIT(A) HAS OBSERVED IN THE IMPUGNED ORDER THAT THE AO HA S NOT GIVEN ANY FINDING THAT THE ASSESSEE HAD INCURRED THE INDIRECT EXPENSES UNDER RULE 8D(2)(II) FOR EARNING OF EXEMPT INCOME. THE ASSESS EE HAD EXPLAINED ONE TO ONE RELATION OF THE BORROWED FUNDS AND THEIR UTILIZATION TOWARDS BUSINESS OF THE ASSESSEE TO PROVE THAT T HE INTEREST EXPENDITURE W AS INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE. I N VIEW OF THE SUBMISS IONS OF THE ASSESSEE THAT THE INTEREST EXPENDITURE HAD BEEN INCURRED BY THE ASSESSEE FOR THE PURPOSE OF ITS BUSINESS AND THAT THE SAME HAD NO RELATION WITH EARNING OF EXEMPT INCOME , T HE LD. CIT(A) HAS DELETED THE DISALLOWANCE ON ACCOUNT OF INTEREST EXPEND ITURE. THE LD. A.R. OF THE ASSESSEE HAS SUBMITTED THAT THE IDENTICAL ISSUE HAD COME FOR CONSIDERATION BEFORE THE TRIBUNAL IN THE OWN CASE OF THE ASSESSEE IN THE SUBSEQUENT ASSESSMENT YEAR I.E. A.Y. 2009 - 10 WHEREIN THE TRIBUNAL, AFTER CONSIDERING THE BALA NCE SHEET OF THE ASSESSEE FOR THE RELEVANT PERIOD, OBSERVED THAT THE ASSESSEE HAD HUGE SURPLUS FUNDS IN THE BALANCE SHEET AS ON 31.03.09. THE TRIBUNAL FURTHER CONSIDERED THE UTILIZATION OF THE LOAN AMOUNT BY THE ASSESSEE AND THEREAFTER HAS OBSERVED THAT T HE SURPLUS FUNDS OF THE ASSESSEE WERE ITA NO.5693/M/2011 & ITA NO.6211/M/2011 M/S. GRAVISS HOSPITALITY LTD. 5 SUFFICIENT TO COVER THE INVESTMENTS. THE ASSESSEE HA D SUBMITTED THE DETAILS OF THE ALLOCABLE EXPENSES FOR EARNING OF EXEMPT INCOME BEFORE THE AO. IT WAS THEN OBSERVED BY THE TRIBUNAL THAT ONCE ALL THE DETAILS RELATIN G TO THE ALLOCABLE EXPENSES FOR EARNING OF EXEMPT INCOME ALONG WITH ENTIRE ACCOUNTS OF THE ASSESSEE WERE SUBMITTED BEFORE THE AO, THE AO WAS REQUIRED TO RECORD HIS SATISFACTION H AVING REGARD TO THE ACCOUNTS OF T HE ASSESSEE THAT THE CLAIM OF THE ASSESSEE IN RESPECT OF EXPENDITURE DEBITED WAS NOT CORRECT OR THAT THERE COULD HAVE BEEN CERTAIN OTHER EXPENDITURE WHICH COULD HAVE BEEN INCURRED IN RELATION TO EARNING OF EXEMPT INCOME. THE TRIBUNAL FURTHER OBSERVED THAT THE AO IN THE CASE HAD STRAIGHTWAY APPLIED R ULE 8D WITHOUT CONSIDERING THE SUO - MOTO WORKING/COMPUTATION GIVEN BY THE ASSESSEE IN RELATION TO DISALLOWANCE UNDER SECTION 14A. THE TRIBUNAL ULTIMATELY HELD THAT ONCE THE AO FAIL S TO COMPLY THE ST ATUTORY REQUIREMENT, THEN HE CAN NOT PROCEED TO MAKE THE D ISALLOWANCE UNDER SECTION 14A(1). THE TRIBUNAL ACCORDINGLY DELETED THE DISALLOWANCE OVER AND ABOVE THE DISALLOWANCE MADE SUO - MOTO BY THE ASSESSEE. 8. WE FIND TH A T THE FACTS AND CIRCUMSTANCES OF THE CASE FOR THE YEAR UNDER CONSIDERATION ARE IDENTICAL TO THAT OF A.Y. 2009 - 10. WE MAY FURTHER OBSERVE THAT THE HONBLE BOMBAY HIGH COURT IN THE CASE OF GODREJ & BOYCE MANUFACTURING CO. LTD. VS. DCIT (SUPRA) HAS CATEGORICALLY HELD THAT RESORT CAN BE MADE TO RULE 8D OF THE INCOME TAX RULES, IF THE AO IS NOT SA TISFIED WITH THE CORRECTNESS OF THE CLAIM MADE BY THE ASSESSEE IN RESPECT OF SUCH EXPENDITURE. THE SATISFACTION OF THE AO HAS TO BE ARRIVED AT HAVING REGARD TO THE ACCOUNTS OF THE ASSESSEE. SUB SECTION 2(14) DOES NOT IPSO - FACTO ENABLE THE AO TO APPLY THE METHOD PRESCRIBED BY THE RULES STRAIGHTWAY WITHOUT CONSIDERING WHETHER THE CLAIM MADE BY THE ASSESSEE IN RESPECT OF SUCH EXPENDITURE IS CORRECT. THE SATISFACTION OF THE AO MUST BE ARRIVED AT ON AN OBJECTIVE BASIS. A PERUSAL OF THE ASSESSMENT ORDER UNDER CONSIDERATION REVEALS ITA NO.5693/M/2011 & ITA NO.6211/M/2011 M/S. GRAVISS HOSPITALITY LTD. 6 THAT THE AO HAS FAILED TO FOLLOW THE GUIDELINES OF OBJECTIVE SATISFACTION AS LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF GODREJ & BOYCE MANUFACTURING CO. LTD. VS. DCIT (SUPRA) WHILE MAKING THE DISALLOWANCE. THE AO HA S STRAIGHTWAY APPLIED RULE 8D FOR WORKING OF THE DISALLOWANCE AGAINST THE MANDATE OF THE PROVISIONS OF SECTION 14A OF THE INCOME TAX ACT. WE MAY FURTHER OBSERVE THAT THE LD. CIT(A) HAVING REGARD TO THE ACCOUNTS OF THE ASSESSEE HAS OBSERVED THAT THE ASSESS EE HAS NOT INCURRED ANY INTEREST/INDIRECT EXPENDITURE FOR EARNING OF THE EXEMPT INCOME. THE BALANCE SHEET OF THE ASSESSEE REVEALS THAT THE ASSESSEE HAD RESERVE AND SURPLUS OF RS.2,69,82,76,106/ - AS ON 31.03.08 AS AGAINST THE TOTAL INVESTMENTS OF RS.69,33, 10,403/ - . THE RESERVE AND SURPLUS INVESTMENTS OF THE ASSESSEE AS ON 31.03.06 WAS AT RS.1 , 31 , 08 , 13 , 9 0 6/ - AND THEREFORE THERE WAS AN INCREASE OF ABOUT RS. 138 CRORES IN RESERVE AND SURPLUS DURING THE YEAR. THE TOTAL INVESTMENTS OF THE ASSESSEE AS ON 31.03.0 7 WAS AT RS.3 , 9 8 , 81 , 678/ - WHICH HAVE INCREASED TO RS. 69 , 33 , 10 , 403/ - AS ON 31.03.08 AND SO THERE WAS THE INVESTMENT OF RS.66 CRORE DURING THE YEAR UNDER CONSIDERATION. THE LOAN LIABILITY OF THE ASSESSEE HAD CONSIDERABLY DECREASED DURING THE YEAR AND THE NE T CURRENT ASSETS OF THE ASSESSEE HAD INCREASED TO RS.72 , 19 , 41 , 777/ - AS AGAINST OF RS.11 , 32 , 40 , 029/ - AS ON 31.03.07. THE LD. D.R., FROM THE BALANCE SHEET HAS TRIED TO EXPLAIN THAT THERE IS AN INCREASE IN THE FIXED ASSETS OF THE ASSESSEE AND THE ASSESSEE HA S ALSO USED ITS FUNDS IN REPAYMENT OF THE LOAN AMOUNT AND HENCE IT CANNOT BE SAID THAT THE ENTIRE SURPLUS WAS USED BY THE ASSESSEE FOR MAKING INVESTMENTS. HOWEVER, AFTER CONSIDERING THE OVERALL FACTS AND CIRCUMSTANCES AND THE EXPLANATION OF THE ASSESSEE R EGARDING THE UTILIZATION OF THE LOAN AMOUNT AND ALSO CONSIDERING THAT THERE IS SUFFICIENT INCREASE IN OWN/SURPLUS FUNDS OF THE ASSESSEE AND THERE BEING NO DECREASE IN THE LOAN LIABILITY AND ALSO CONSIDERING THE QUANTUM OF INVESTMENT MADE IN RELATION TO RES ERVE AND SURPLUS FUND AVAILABLE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) ITA NO.5693/M/2011 & ITA NO.6211/M/2011 M/S. GRAVISS HOSPITALITY LTD. 7 WHILE DELETING THE DISALLOWANCE ON ACCOUNT OF INDIRECT EXPENDITURE UNDER RULE 8D(2) OF THE ACT. WE FURTHER FIND THAT MOST OF THE INVESTMENTS MADE BY THE ASSESSEE DURING THE YEAR ARE IN MUTUAL FUNDS WHICH DO NOT REQUIRE ANY SPECIFIC INCURRING OF EXPENDITURE WHICH ARE GENERALLY DONE THROUGH AGENTS. OTHERWISE, THERE IS NO CONSIDERABLE INCREASE OF THE INVESTMENT IN EQUITY SHARES ETC. THE ASSESSEE HAS ALREADY DISALLOW ED A SUM OF RS.2 LAKH. CONSIDERING THE NATURE OF INVESTMENTS OF THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION, WE DO NOT FIND ANY JUSTIFICATION ON THE PART OF THE AO IN STRAIGHTWAY APPLYING RULE 8D AND WITHOUT RECORDING ANY DISSATISFACTION IN RELATION TO THE SUO - MOTO WORKING MADE BY THE ASSESSEE. E VEN OTHERWISE, FACTS FOR THE YEAR UNDER CONSIDERATION ARE SQUARELY COVER WITH THE DECISION OF THE TRIBUNAL IN THE OWN CASE OF THE ASSESSEE IN THE SUBSEQUENT YEAR . W E THEREFORE DO NOT FIND ANY JUSTIFICATION F OR THE LD. CIT(A) TO CONFIRM THE DISALLOWANCE UNDER RULE 8D(2)(III) OF THE INCOME TAX RULES WITHOUT CONSIDERING THE WORKING/COMPUTATION OFFERED BY THE ASSESSEE AND ALSO WITHOUT IGNORING THE NATURE OF INVESTMENTS MADE BY THE ASSESSEE. THE ORDER OF THE LD. CIT(A) CONFIRMED THE DISALLOWANCE UNDER RULE 8D(2)(III) IS THEREFORE SET ASIDE. IN VIEW OF OUR OBSERVATIONS MADE ABOVE, THE DISALLOWANCE UNDER SECTION 14A IS RESTRICTED TO THE SUO - MOTO DISALLOWANCE OF RS.2 LAKH OFFERED BY THE ASSESSEE AND THE REMAINING DI SALLOWANCE OVER AND ABOVE THE DISALLOWANCE OFFERED BY THE ASSESSEE HIMSELF IS THEREFORE ORDERED TO BE DELETED. 9 . NOW WE TAKE UP THE REVENUES APPEAL BEARING ITA NO.6211/M/2011 . ITA NO.6211/M/2011 1 0 . THE REVENUE HAS TAKEN THE FOLLOWING THREE GROUNDS O F APPEAL: 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT (A) ERRED IN RESTRICTING THE DISALLOWANCE OF EXPENSES U/S 14A @ 0.5% OF THE AVERAGE INVESTMENT AMOUNTING TO RS. 18,32,980/ - WITHOUT ESTABLISHING ANY NEXUS BETWEEN INVESTM ENT IN SHARES AND ASSESSEE'S OWN FUNDS A N D W ITHOUT CONSIDERING THE SPECIFIC PROVISION OF RULE 8D OF THE I T RULES. ITA NO.5693/M/2011 & ITA NO.6211/M/2011 M/S. GRAVISS HOSPITALITY LTD. 8 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT (A) IS RIGHT IN HOLDING THAT THE REMISSION OF LOAN LIABILITY OF RS . 2,10,73,487/ - IS CAPITAL RECEIPT NOT CHARGEABLE TO TAX INSPITE OF APEX COURT'S DECISION IN THE CASE OF GOETZ (INDIA) LTD. REPORTED IN 284 ITR 323 (SC)? 3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT (A) IS RIGHT IN DIRECTING T HAT THE AMOUNT OF DISALLOWANCE OF EXPENSES U/S 14A TO BE ADDED WH ILE COMPUTING BOOK PROFIT U/S 1 15JB SHOULD BE RESTRICTED @ 0.5% OF AVERAGE INVESTMENT AMOUNTING TO RS. 18,32,980/ - AS AGAINST THE TOTAL AMOUNT OF RS. 79,78,757/ - DISALLOWABLE UNDER SECTION 14 A. THE APPELLANT CRAVES LEAVE TO ADD TO, AMEND OR WITHDRAW THE AFORESAID GROUND OF APPEAL.' 1 1 . GROUND NO.1 IS RELATING TO THE ACTION OF THE LD. CIT(A) IN DELETING THE DISALLOWANCE ON ACCOUNT OF INDIRECT EXPENDITURE. IN VIEW OF OUR OBSERVATIONS MADE ABO VE, WE HAVE ALREADY HELD THAT THE DISALLOWANCE UNDER SECTION 14A IS RESTRICTED TO THE DISALLOWANCE OF RS.2 LAKH WHICH HAS BEEN SUO - MOTO MADE BY THE ASSESSEE. THIS GROUND OF THE REVENUE IS THEREFORE DISMISSED. 1 2 . VIDE GROUND NO.2, THE REVENUE HAS AGITA TED THE ACTION OF THE LD. CIT(A) IN HOLDING THAT THE REMISSION OF LOAN LIABILITY OF RS.2,10,73,487/ - WAS CAPITAL RECEIPT AND NOT CHARGEABLE TO TAX. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE COMPANY WAS ALLOWED REBATE ON LOAN LIABILITY OF RS.305103 55/ - FROM INTER CONTINENTAL HOSPITAL (HEREINAFTER REFERRED TO AS SCH ) AND SC HOTELS & RESORTS INDIA PVT. LTD. THE ENTIRE REBATE ON LOANS WAS CREDITED TO THE P& L ACCOUNT UNDER THE HEAD OTHER INCOME AND THE SAME WAS OFFERED FOR TAX. DURING THE ASSESSMEN T PROCEEDINGS, THE ASSESSEE FURNISHED THE DETAILS AND REBATE ON LOAN TO THE AO AND SUBMITTED THAT OUT OF TOTAL REBATE ALLOWED , AN AMOUNT OF RS.2 , 10 , 73 , 487/ - RELATED TO PRINCIPAL AMOUNT OF LOAN WAIVED BY SC HOTELS & RESORTS INDIA PVT. LTD. THE ASSESSEE SUB MITTED BEFORE THE AO THAT THE RECEIPT OF LOAN FROM SCH WAS ON CAPITAL ACCOUNT AND THEREFORE THE WAIVER OF THE PRINCIPAL AMOUNT WAS ALSO ON CAPITAL ACCOUNT. THE ASSESSEE SUBMITTED THAT THE WAIVER OF LOAN ON PRINCIPAL AMOUNT INADVERTENTLY REMAINED TO BE ITA NO.5693/M/2011 & ITA NO.6211/M/2011 M/S. GRAVISS HOSPITALITY LTD. 9 EXC LUDED FROM TOTAL INCOME AND THE SAME WAS WRONGLY OFFERED FOR TAX AND THEREFORE THE SAME WAS REQUIRED TO BE DEDUCTED FROM THE TOTAL INCOME. THE AO, HOWEVER, DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AND DISALLOWED THE SAME OBSERVING THAT THE ASSESSEE W AS REQUIRED TO FILE A REVISED RETURN OF INCOME IN THIS RESPECT. HE RELIED ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF GOETZE (INDIA) LTD. VS. COMMISSIONER OF INCOME - TAX [2006] 157 TAXMAN 1 (SC)[2006] 284 ITR 323 (SC ). 1 3 . IN APPEAL, T HE LD. CIT(A), AFTER GOING THROUGH THE DETAILS SUBMITTED BY THE ASSESSEE VIDE HIS DETAILED ORDER OBSERVED THAT THE WAIVER OF LOAN WAS REQUIRED TO BE TREATED AS CAPITAL RECEIPT AND WAS NOT TAXABLE INCOME. HE, WHILE RELYING UPON THE DECISION OF THE TRIBUNAL IN THE CASE OF CIT VS. CHICAGO PNEUMATICS LTD. [ 2007] 15 SOT 252 (MUMBAI) HELD THAT IF THE ASSESSEE WAS ENTITLED TO A CLAIM THE SAME SHOULD BE ALLOWED TO THE ASSESSEE. HE THEREFORE DIRECTED THE AO TO CALCULATE THE AMOUNT OF RS.21073487/ - BEING THE REBA TE RECEIVED ON LOAN AS THE SAME WAS CAPITAL RECEIPT. 1 4 . WE MAY OBSERVE THAT THE LD. CIT(A) HAS DISCUSSED THE NATURE OF THE LOAN AMOUNT AND HAS HELD THAT THE WAIVER WAS NOT IN RESPECT OF ANY BENEFIT IN KIND OR OF ANY PERQUISITE. THE WAIVER WAS OF THE PR INCIPLE LOAN AMOUNT IN CASH. THE ASSESSEE HAD NOT CLAIMED ANY DEDUCTION IN RESPECT OF LOSS , EXPENDITURE OR TRADING LIABILITY IN RELATION TO THE LOAN AMOUNT. THE WAIVER WAS OF THE PRINCIPLE AMOUNT OF LOAN FOR CAPITAL ASSET. HE, THEREAFTER, RELYING UPON T HE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT , IN THE CASE OF MAHINDRA & MAHINDRA LTD. VS. CIT 261 ITR 501, HELD THAT THE WAIVER OF THE LOAN AMOUNT WAS A CAPITAL RECEIPT NOT TAXABLE AS BUSINESS INCOME OF THE ASSESSEE. WE MAY FURTHER OBSERVE THAT THE HONBLE BOMBAY HIGH COURT IN THE CASE OF PRUTHVI BROKERS & SHAREHOLDERS PVT. LTD. ITA NO.3908 OF 2010 DECIDED ON 21.06.12, WHILE RELYING UPON THE VARIOUS DECISIONS OF THE HONBLE SUPREME COURT AND OTHER ITA NO.5693/M/2011 & ITA NO.6211/M/2011 M/S. GRAVISS HOSPITALITY LTD. 10 HONBLE HIGH COURTS HAS HELD THAT EVEN IF A CLA IM IS NOT MADE BEFORE THE AO IT CAN BE MADE BEFORE THE APPELLATE AUTHORITIES. THE JURISDICTION OF THE APPELLATE AUTHORITIES TO ENTERTAIN SUCH A CLAIM IS NOT BARRED. THE HONBLE HIGH COURT HAS FURTHER OBSERVED THAT THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF GOETZE (INDIA) LIMITED V. CIT (2006) 157 TAXMAN 1, RELATING TO THE RESTRICTION OF MAKING THE CLAIM THROUGH A REVISED RETURN WAS LIMITED TO THE POWERS OF THE ASSESSING AUTHORITY AND THE SAID JUDGMENT DOES NOT IMPINGE ON THE POWER OR NEGATE THE POWERS OF THE APPELLATE AUTHORITIES TO ENTERTAIN SUCH CLAIM BY WAY OF ADDITIONAL GROUND. IN VIEW OF THE ABOVE STATED POSITION OF LAW, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) WHILE DIRECTING THE AO TO COMPUTE THE INCOME OF THE ASSESSEE A FTER ALLOWING THE CLAIM OF THE ASSESSEE ON THIS ISSUE. 15. IN THE RESULT, APPEAL OF THE ASSESSEE IS HEREBY ALLOWED AND THAT OF THE R EVENUE IS HEREBY DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 17.06. 201 5 . SD/ - SD/ - ( R.C. SHARMA ) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 17.06.2015 . * KISHORE , SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBA I THE CIT ( A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.