TMI Blog2015 (6) TMI 718X X X X Extracts X X X X X X X X Extracts X X X X ..... icial to the interest of Revenue. When the learned CIT was setting aside the matter to the file of the A.O. for framing the assessment orders afresh as per the law after examining/making inquiry on the issue, he was not justified and a contradiction in his stand in directing the Assessing Officer to tax the lease income in the hands of the Ambience Hotel & Resorts and reduce the same from Ambience Developer & Infrastructure Pvt., especially when keeping in view the peculiar facts and circumstances of the case and in absence of examination/making inquiry by the A.O., it was a debatable issue as to in whose hand and under what head the lease income is to be taxed. The above findings of Learned CIT typed in bold to tax the lease income in the hands of M/s. Ambience Hotel & Resorts Ltd., and direction to the Assessing Officer to reduce the same income from M/s. Ambience Developers & Infra-structure (P) Ltd. are thus held invalid and are modified by deleting the same. - Decided partly in favour of assesse - ITA No. 2500/Del/2012,ITA No. 2501/Del/2012 - - - Dated:- 16-6-2015 - Shri I.C. Sudhir and Shri T.S. Kapoor ,JJ. For the Petitioner: S/Shri RK Gupta Samit Goel, CA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ease rental income could be assessed is unsustainable. 3.1 That under the facts and circumstances, the Ld.CIT erred in invoking sec. 263 by directing the A.O. to examine the issue that the lease rental incomes from shops/retail space owned by Ambience Hotels Resorts Ltd. should not be assessed in the assessee s hands but in the hands of Ambience Hotels Resorts Ltd. and thereafter in further directing the A.O., that if it is assessable in assessee hands, then it should be assessed as income from sub-letting and should be assessed under the head income from other sources . The order of the Ld. A.O. on this issue is neither erroneous nor prejudicial to the interest of the Revenue. 3.2 That under the facts and circumstances, the Ld. A.O. after proper application of mind has taken a conscious decision by adopting one of the possible views, therefore, invoking of sec. 263 is unsustainable. 4. That under the facts and circumstances, Ld. CIT erred in law as well as on merits in holding that the acceptance by A.O. of sale consideration of shares of 6 group private limited companies at face value, at cost and at par without declaring any capital gain is erroneous and p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Resort Ltd., the Assessing Officer is directed to reduce the same from Ambience Developers and Infrastructure P. Ltd. where the above income has been erroneously assessed. This revisional order has been questioned by the above named two assessees before the ITAT on several grounds. 6. In support of the grounds, the Learned AR submitted that the revisional orders are invalid on six aspects; i) Firstly, both the assessments have been completed after search on 10.10.2007 after conducting investigation and inquiries by the Assessing Officer. Both the assessees are sister/related concerns. The hotels company was running a five star hotel by the name The Leela at Gurgaon. The developers company was having a mall adjacent to hotels. Hotel was in need of funds for the hotel project and the developers was having spare funds. Thus, both companies entered into an agreement whereby developers gave interest free refundable deposits of ₹ 75 crores to Hotels. In turn, hotels company gave to developer company the rights in some retail spaces in the hotel premises for managing leasing and to receive an appropriate revenue and receipts from said spaces. The revenue receipts from the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntended the Learned AR. He submitted that both the companies fall within the same tax bracket of 30%. He submitted that it is an admitted fact that ₹ 6,26,84,240 has been declared as income from house property in the hands of developers company. The Learned CIT has opined that ₹ 6,27,84,240 should have been assessed as income from house property in the hands of hotels company. Wherever it stands assessed, the tax impact shall be the same. The observation of the Learned CIT that in one case, there is a loss and in other case, there is profit, therefore, this alleged arrangement will affect the tax amount is totally misconceived. In case of loss in a company, the loss is allowed to be carried forward, therefore, it will ultimately neutralize the tax impact in subsequent years. The Learned AR accordingly submitted that in substance the impugned assessment orders are not prejudicial to the interest of Revenue. Without prejudice to the above submissions, the Learned AR submitted that the Learned CIT in the order of developers has himself admitted that it is not prejudicial to the interest of revenue and referred the beginning paragraph at page No. 7 of the revisional o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rights to exploit and enjoy the receipts of certain retail spaces owned by hotel which exists in the hotel premises. It is a proper business assessment whereby, hotel is enjoying ₹ 75 crores interest free funds, therefore, it is not a case, where the income is transferred without any consideration. He submitted that the decision in the case of Tara Devi Aggarwal vs. CIT 88 ITR 323 (S.C) relied upon by the Learned CIT is not applicable. IN that case, income was transferred in order to assist someone else who would have been assessed to a larger amount. Section 60 is applicable when the asset is not transferred. This no transfer of assets does not mean that to come out of sec. 60, assets should be permanently transferred. He pointed out that in the present case, there is transfer of assets by transferring the rights of exploiting the specified space owned by hotel to the developers against which ₹ 75 crores was given. Transfer of rights in said retail spaces is a transfer. Right is also as asset. Thus, it is not a case of no transfer of asset . Hence, section 60 is not applicable. In support, he placed reliance on the decision in the case of ITO vs. Nalin Bhai M. Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d with the submission that the Assessing Officer had failed to examine the issue involved regarding the receipt of ₹ 6,27,84,240 during the course of assessment proceedings before passing the original Assessment order, the Learned CIT was justified in invoking the provisions laid down under sec. 263 of the Act. He submitted that income has to be assessed in the correct hands. The provisions laid down under sec. 60 of the Act cannot be compared with sec. 64 of the Act since both are having different proposition. She placed reliance on the decision of Hon'ble Supreme Court in the case of Smt. Tara Devi Aggarwal Vs. CIT - 88 ITR 323 (S.C). 10. Considering the above submissions, we find that receipt of ₹ 6,27,84,240 is the subject matter of the orders passed under sec. 263 of the Act in both the cases. The related facts are that the hotel was in need of funds for its hotel project. The developer was having spare funds. Thus, both the companies entered into an agreement whereby the developer gave interest free refundable deposits of ₹ 75 crores to hotels. In turn, hotels gave to the developers the right in some retail spaces in the hotel premises for managing le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same from Ambience Developer Infrastructure Pvt., especially when keeping in view the peculiar facts and circumstances of the case and in absence of examination/making inquiry by the A.O., it was a debatable issue as to in whose hand and under what head the lease income is to be taxed. For a ready reference, the relevant portion of the revisional order in the case of Ambience Hotel Resorts Ltd. affecting the taxability of Ambience Developers Infra-structure (P) Ltd. as well, is being reproduced as under: I, thus, hold that the assessment order passed in the case of the assessee by the Assessing Officer, Central Circle-16, New Delhi on 31.12.2009 u/s. 143(3) is erroneous and prejudicial to the interest of Revenue. Therefore, the said order is set aside on the above issue and the assessment proceedings on the issue are restored back to the file of the Assessing Officer. The A.O. is directed to frame the assessment afresh on this issue as per the provisions of the Income-tax Act and allow permissible deductions as per law, after affording the assessee an opportunity of being heard and after making proper inquiries and verifications. Further, as the above lease income is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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