MALL HOTEL LIMITED,DELHI V. DCIT CIRCLE 16(1), DELHI

ITA 5060/DEL/2025

AI Insights

Mall Hotel Limited appealed against the order of the Commissioner of Income Tax (Appeals) which sustained certain additions to their income for the Assessment Year 2009-10. The main issues revolved around the additions made on account of Power & Fuel Expenses, insurance expenses, and building repair expenses. The Tribunal examined the submissions and evidence presented, including previous assessments and orders, and found that the additions made were either redundant or unjustified, leading to the partial allowance of the appeal.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 835726 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-02-2026
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 20-08-2025
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Business income; Opportunity of being heard; Business expenditure; Principle of natural justice; Fuel Charges
• Section: 143(3)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH, ‘SMC’: NEW DELHI BEFORE SHRI C.N. PRASAD, JUDICIAL MEMBER ITA No.5060/Del/2025 Assessment Year 2009-10 Mall Hotel Limited D-893, New Friends Colony, Sujan Mohindra Road, Delhi PAN No.AADCM3128R Vs. DCIT Circle -16 (1) Delhi Appellant Respondent Appellant Sh. Anand Kumar Pandey, Advocate Sh. Archit Pandey, Advocate Respondent Sh. Manoj Kumar, Sr. DR Date of Hearing 08.01.2026 Date of Pronouncement 11.02.2026 ORDER PER C.N. PRASAD, JM, This appeal is filed by the assessee against the order of the Ld.Commissioner of Income Tax (Appeals)/NFAC dated 18.06.2025 for A.Y. 2009-10. 2. The assessee has raised following grounds of appeal :- “1. That on the facts and circumstances of the case and in law, the Ld. Commissioner of Income Tax Appeals (hereinafter referred to as 'CIT (A)'), grossly erred in sustaining Rs.4,50,118/- on account of Power & Fuel Expenses. In spite grounds of appeal and the records Printed from counselvise.com Page | 2 are available with him which is uncalled for, based on surmises and conjectures and bad in law. 2. That on the facts and circumstances of the case and in law, the Ld. Commissioner of Income Tax Appeals (hereinafter referred to as 'CIT (A)'), grossly erred in sustaining Rs.2,26,778/- on account of insurance expense out of Rs 4,00,876/-. In spite grounds of appeal and the records are available with him which is uncalled for, based on surmises and conjectures, adhoc in nature and bad in law. 3. That on the facts and circumstances of the case and in law, the Ld. Commissioner of Income Tax Appeals (hereinafter referred to as 'CIT (A)'), grossly erred in sustaining the 24.05% of building repair expenses in respect of JHV(Cinema) and 1.38% of building repair expenses in respect of Ramada(Hotel). In spite grounds of appeal and the records are available with him which is uncalled for, based on surmises and conjectures and bad in law. 4. Because on the Facts and Circumstances of the case order passed by Ld. A.O. and CIT(A) is arbitrary in nature, against the principle of natural justice & equity and also without giving proper opportunity of being heard. 5. The Appellant hereby prays for any consequential relief arising out of the above appeal and further prays for any addition, modification, deletion and alteration in the ground of appeal for the serve of Natural Justice. 3. The Ld. Counsel for the assessee with reference to ground No.1 which is in respect of common maintenance charges relating to Power and Fuel Expense, it is submitted that during the relevant assessment year the assessee received Power charges from tenant shops in Ramada Hotel amounting Printed from counselvise.com Page | 3 to Rs.4,59,305/- which was already disclosed as income in the P & L account. The Ld. Counsel further submitted that the consumption of power fuel charges was also debited to P & L account and, therefore, making this addition again amounts to double addition. The Ld. Counsel further submitted that the issue had already been examined by the AO in the course of assessment proceedings for the A.Y.2018-19 in the draft assessment order dated 12.04.2021 and the contention of the assessee was accepted while passing the regular assessment order u/s. 143(3) of the Act dated 17.04.2021 which are placed at pages 25 to 35 of the paper book. 4. The Ld. Counsel for the assessee with respect to ground No.2 i.e. addition sustained on account of Insurance Expenses, it is stated that this ground is not pressed. In view of the submission of the Ld. Counsel this ground is dismissed as not pressed. 5. Coming to ground No.3 of grounds of appeal the Ld. Counsel for the assessee submitted that this issue i.e. addition in respect of Building Repair came up for consideration before the Tribunal for the A.Y.2016-17, the order of the Tribunal is placed on pages 36 to 43 of the paper book. Referring to page 41 of the paper book which is the Tribunal’s order para-10 the Ld. Counsel submitted that identical issue came up for consideration and the Tribunal deleted the disallowance in respect of addition made towards repairs and maintenance to buildings. Printed from counselvise.com Page | 4 6. Heard rival submissions and perused the orders of the authorities below. In so far as ground No.1 is concerned we observe that similar view has been examined by the AO for the A.Y.2018-19 and accepted the stand of the assessee while passing the draft assessment order by observing as under :- “4.5 The assessee has offered income to the extent of Rs. 6,27,52,241/- out of total rental of income of Rs. Rs. 9,92,04,299/- as Income from House Property barring the income it has received on account of Common Maintenance charges amounting to Rs. 3,22,99,402/- which it has treated as business income. The above stand of the assessee is accepted and income of Rs. 6,69,04,897/- (6,27,52,241 + 41,52,656) which it has earned form of rent from shops at JMV Mall and Hotel Ramada is deemed to be Income from House Property. As per the above discussion during assessment proceedings the assessee has submitted the following computation of Income from House property:” 7. Further it is also the contention of the assessee that the assessee had already accounted for the income in its P&L account. Thus, considering the facts and circumstances the addition made in respect of common area maintenance charges is deleted. Ground No.1 is allowed. 8. Coming to the ground No.3 of grounds of appeal which is in respect of repair to buildings we observe that similar issue came up for consideration before the Tribunal in assessee’s own case for the A.Y.2016-17 where in the Tribunal held as under :- 7. The Ground No. 3 is regarding disallowance of Rs. 16,27,495/- being 10% of Rs. 1,62,74,947/- claimed as maintenance of JHV Mall which was disallowed by the A.O. and the same has been upheld Printed from counselvise.com Page | 5 by the CIT(A). The Ld. counsel for the assessee submitted that the CIT(A) has erred in sustaining the disallowance ignoring the fact that Rs. 10,61,415/- for building maintenance has been incurred during the year under consideration in the books of accounts of JHV mall and Multiplex, remaining Rs. 1,52,13,531/- related to Ramada Plaza Hotel, however, the repair and maintenance of building related to JHV Mall and Multiplex amount of Rs. 10,61,415/-has been incurred against the CAM charges received amounting to Rs.1,36,73,547/- Thus, the disallowance of building repair treating the same against the rental income is highly unjustified. The Ld. Counsel also submitted that in the subsequent year i.e. Assessment Year 2018-19 the same issue arose for consideration before the A.O. and after hearing in detail, no such disallowance has been made by the Department. Therefore, submitted that the addition made in the present Assessment Year deserves to be deleted. 8 The Ld. DR relied on the findings of the A.O. and the CIT(A) and submitted that the above grounds of Appeal of the assessee deserves to be dismissed. 9. We have heard both the parties and perused the material available on record. The assessee running hotel under the name and style of Ramada Plaza, JHV in the separate premises, apart from the hotel, the assessee having JHV Mall in which the assessee is running a Multiplex Theater, Food court and shops given on rent, the expenses claimed in P & L Account are business expenditure against business income of hotel business, theatre income, food court, Mirchi Restaurant etc. it is the case of the assessee that during the year the assessee earned rent from various shops of Rs.4,81,82,741/- and Rs. Common area 1,53,28,744/ as common area maintenance charges. maintenance charges is business income against various expenses for running and maintenance of Common facilities i.e., Housekeeping expenses, Repair & Maintenance Expenses, Mall Insurance, Security Expenses, Staff Salary (Mall Operation), electricity charges for common area etc not area given on rent, accordingly the same is part of business income and expenses over & above incurred by the assessee is allowable as business expenditure. It is further submitted that hotel JHV Printed from counselvise.com Page | 6 Ramada and JHV Mall both are running in separate premises. 10. The dispute before the A.O. regarding building repair and maintenance expenses against rental income. The assessee had provided details of building repair and maintenance unit wise and corresponding business income as under:- 11. From the above chart it depicts that only Rs.10,61,415/- for building maintenance has been incurred during the year under consideration in the books of account of JHV Mall and multiplex and remaining Rs. 1,52,13,531/-related to Ramada Plaza Hotel. It is the case of the assessee that the repair and maintenance of building related to JHV Mall and Multiplex amounting to Rs. 10,61,415/ has been incurred against the CAM charges received amounting to Rs.1,36,73,547/-. Thus, the CIT(A) has committed an error in making proportionate disallowance of building repairs treating the same against the rental income. It is found that the similar issue has also arose for consideration before the A.O. for the Assessment Year 2018-19, in the draft assessment order placed in the paper book Page No. 85 to 88, the similar issuc has Printed from counselvise.com Page | 7 been considered by the A.O. but in the final Assessment Order for the Assessment Year 2018-19 placed on paper hook 89 to 90 no such disallowance has been made. Considering the above facts and circumstances, we find merit in the argument of the Ld. AR regarding Ground No. 3 and we deem it fit to allow the ground No.3. Accordingly, Ground No. 3 of the assessee is allowed and the disallowance of Rs. 16,27,495/- made by the A.O. which was sustained by the CIT(A) is hereby deleted.” 9. Following the order of the Tribunal the addition made in respect of repairs to building and maintenance is deleted. Ground No.3 is allowed. 10. In the result, the appeal of the assessee is partly allowed. Order pronounced in the open court on 11.02.2026. Sd/- [C.N. PRASAD] JUDICIAL MEMBER Dated:11.02.2026 NEHA , Sr.P.S.* Copy forwarded to: 1. Appellant 2. Respondent 3. PCIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi Printed from counselvise.com "