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2015 (2) TMI 359 - HC - Income TaxRevision u/s 263 - advance amount of sale of room nights - considering that the principal business of the assessee engaged in running of hotels, resorts and clubs is to provide accommodation and other facilities to tourist members, then a provision of the nature made cannot be said to be an allowable revenue expenditure - Held that:- The Tribunal correctly concluded that the accounting of advance sale of room nights must be determined having regard to the undisputed facts. The assessee had collected an advance and under promise to make available to the customers the rooms. The customer is entitled to surrender the room nights in case they are not utilised and opt for surrender value. When a customer opts for surrender value, he shall be paid in cash by the assessee, or in the alternative the customer may opt to buy or utilise the products and services of the company or group companies. The Tribunal referred to the chart and in relation to each assessment year giving a break-up of the advance amount collected showing more than 99 per cent. of the customers surrendered the room nights which is not only the amount paid but which is inclusive of a premium over and above of the collected value. Even if the refund is not made in its entirety, still that will not mean that the amount received is income. The Tribunal accepted the method adopted by the assessee. A capital receipt does not become the revenue receipt just because some expenditure is incurred on the same, and it is claimed by the assessee. The finding of fact that the schemes oblige the assessee to refund not only the advance but also the surrendered value, then the further conclusion that the assessee incurs a liability and no income accrues to the assessee on receipt of this advance, cannot be said to be perverse or vitiated by any error of law apparent on the face of record. Thus considering the sweeping nature of the directions issued by the Commissioner in exercise of his powers under section 263 of the Income-tax Act, 1961, the appeal to the Tribunal was competent and maintainable. The Tribunal has considered the matter from all angles, and while upholding the exercise undertaken by the Commissioner, has on the merits found that the Assessing Officer was not in any error. The interest of the Revenue are not prejudicially affected. - Decided against revenue.
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