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ACIT, Circle 9 (1) , New Delhi Versus M/s Sunair Hotels Ltd., New Delhi

2015 (8) TMI 38 - ITAT DELHI

Disallowance being 30% deduction for repair u/s 24 on rental income - CIT(A) held it as service charges and not rental income - CIT(A)deleting the addition considered by the AO as income from other sources instead of rental income - Held that:- CIT(A) on the issue in question being in conformity with the orders of the ITAT for earlier years and there being no change in facts and circumstances, we see no reason to interfere in the order of ld. CIT(A) to hold that though two agreements had been ma .....

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w that form and substance of the transaction, and not the nomenclature assigned to it, determine the nature of the income . Accordingly, the appellant is eligible to claim standard deduction U/s 24 of the Act from the same and the disallowance so made is deleted - Decided in favour of assessee.

Addition of litigation fees paid to some law firms - CIT(A) deleted addition - Held that:- CIT(A) following the Tribunal’s order in assessee’s own case for AY 2007-08 allowed the assessee’s cl .....

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related to criminal' proceedings against directors. or were otherwise 'inadmissible and were wrongly claimed by the assessee company.' This has . not been shown, Therefore, on facts and circumstances for the case, we are unable to interfere with the finding of the ld . CIT(A) that no inadmissible expenditure was claimed by the appellant under the head 'litigation expenses'. Addition 'made was rightly deleted - Decided in favour of assessee.

Disallowance of depreciation on the basis .....

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B.R.R. Kumar Sr. DR For the Respondent : Shri Vinod Kumar Bindal CA ORDER PER S.V. MEHROTRA, A.M:- These appeals, filed by the assessee, is directed against separate orders of ld. CIT(A) pertaining to AY 2009-10 & 2010-11. Both the appeals were heard together and are being disposed of by a consolidated order for the sake of convenience. ITA no. 4450/Del/2012 - AY 2009-10: 2. Brief facts of the case are that in the relevant assessment year the assessee had filed its return declaring income o .....

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usiness income returned before set off B/F losses 13,10,30,537/- Add: Legal and professional charges 14,33,347/- Excess depreciation 99,31,096/- Total: 14,23,94,980/- Less : Set off c.f unabsorbed Depreciation B/F/losses 1,95,28,540/- 12,28,66,440/- Income from other sources: Service charges receipt 2,64,72,720/- Total: 18,28,57,628/- Less: Deduction under chapter VIA 11,300/- Total assessed income 18,28,46,328/- R/O 18,28,46,330/- 2.1. Ld. CIT(A) allowed the assesse s appeal. Being aggrieved, t .....

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s income from other sources instead of rental income. 3. On the facts and circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of ₹ 14,33,347/- out of litigation fees paid to some law firms by holding the same as not incurred for business purposes. 4. On the facts and circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of ₹ 99,31,096/- towards depreciation on the basis of a finding given in the block assessment order. 3. Brief facts ap .....

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Metropolitan centre at Bangla Sahib Road, New Delhi. The assessee had also entered into a service agreement on the same day with Mitsui & Co. India Pvt. Ltd. The bifurcation of the total receipts as per the two agreements were as under: (i) Sublicense fee Rs. 4,78,83,525/- (ii) Service Charge receipt ₹ 2,64,72,720/- Total: Rs. 7,43,56,245/- 3.1. AO accepted the assessee s claim qua sub-license fee and treated the same as Income from house property . However, as regards service charge r .....

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ving as under: "11 . The assessee impugned above disallowance in appeal and drew 1d. CIT(A)'s attention to two agreements dated 29.10.97 With Mitsui & Co: Ltd. for letting put its commercial center to that concern; One agreement was fur rent and the other was for services claimed to have been entered at the insistence of the tenant. The assessee also placed on record subsequent changes in the agreement between the tenant and the assessee. It was contended that the appellant never pr .....

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u/s 24 of the LT. Act. The Id. CIT(A) observed as under:- 1 have considered the facts and circumstances, the reasoning of the AO and the submission of the assessee. After considering the same 1 am. of the opinion that though two agreements had been made for sublicense fee i.e rent and service charges separately, yet the fact remains that no services of any kind were provided by the appellant to Mitsui Co. To compound the issue, the AO has also failed to bring on record the fact, whether any expe .....

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U/s 24 of the Act from the same and the disallowance of ₹ 54,39,600/- so made is deleted." 3.3. We have heard rival submissions. The order of the ld. CIT(A) on the issue in question being in conformity with the orders of the ITAT for earlier years and there being no change in facts and circumstances, we see no reason to interfere in the order of ld. CIT(A) on the issue in question. Ground nos. 1 & 2 are dismissed. 4. Brief facts apropos ground no. 3 are that a sum of ₹ 1,37 .....

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dingly, made an addition of ₹ 14,33,347/-. 4.1. Ld. CIT(A) following the Tribunal s order in assessee s own case for AY 2007-08 (supra), allowed the assessee s claim by observing as under:. 17. The revenue has brought the issue hi appeal before the Appellate Tribunal. The ld. DR relied upon the order of the AO. The ld. Counsel for the assessee, on the other hand, drew our attention to the detail of litigation expenses in all three years and contended that all the expenses were .incurred by .....

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our opinion, it was for the revenue authorities to show from the detail of expenses 'that expenses disallowed related to criminal' proceedings against directors. or were otherwise 'inadmissible and were wrongly claimed by the assessee company.' This has . not been shown, Therefore, on facts and circumstances for the case, we are unable to interfere with the finding of the ld . CIT(A) that no inadmissible expenditure was claimed by the appellant under the head 'litigation expe .....

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aimed depreciation to the tune of ₹ 36,53,108/-. The AO observed that in assessee s case in the block assessment order u/s 158BC dated 29-11-02, this issue was considered and disallowance out of depreciation was made on the assets which were considered unexplained. This disallowance was made in subsequent assessment years by the AO. He withdrew the excessive depreciation as per calculation given in the chart enclosed as annexure 2 to the tune of ₹ 99,31,096/- and made the addition ac .....

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l filed by the revenue in the block assessment. The Tribunal considered the question whether any disallowance by treating expenditure on construction as bogus was justified The Tribunal noted that certain material collected by the AD was not put to the assessee by the AO Subsequently, on direction of the appellate authority, the matter was re-examined The assessee had further produced material to show that cost of construction declared was lower than similar cost shown by other hotels. The Tribu .....

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made solely based on similar disallowance and addition made in the block assessment year. No new or fresh material was placed on record to justify addition/disallowance of depreciation in the three years under appeal. The disallowance in block assessment year was deleted by ld CIT(A) for the reason? already discussed above. The said order has been confirmed by ITAT and disallowance of depreciation or of expenses claimed to be incurred on construction has not been sustained The assessee has place .....

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