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Deputy Commissioner Of Income Tax Versus M/s Peerless Hotels Ltd

2015 (9) TMI 168 - ITAT KOLKATA

Disallowance of expenditure on account of Guest Complimentary and Guest Supplies - CIT(a) deleted disallowance - Held that:- Principally as regards allowability of expenditure debited on account of food and beverages under the head Guest complimentary expenses and expenditure on account of supply of sundry cosmetics under the head guest complimentary the same is allowable. However, we note that as regards guest complimentary before the ld. CIT(A) the assessee has submitted that it was on account .....

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try shown as above showed that it is not a simple matter as debiting guest complimentary on account of food and beverages and crediting room rent. It cannot be said that the ld. CIT(A) has properly understood the scheme of assessee's entry. Before us also except producing copy of the ledger account the ld. Counsel of the assessee could not explain in detail the impact of the entries in the aforesaid complimentary ledger account. How the guest complimentary account is affected by business promoti .....

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TA No.962/Kol/2011 - Dated:- 3-3-2015 - Mahavir Singh And Shamim Yahya JJ. For the Appellant : Shri Pinaki Mukherjee, JCIT For the Respondent : Shri T K S Biswas, FCA ORDER Per: Shamim Yahya: This appeal by the revenue is directed against the order of ld.CIT(A)-VIII, Kolkata dated 09.02.2011 and pertains to Assessment Year 2005-06. 2. The grounds of appeal read as under :- "1. That on the facts and circumstances of the case in law, the Ld. CIT(A) erred in deleting the disallowance of ₹ .....

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assessee had debited ₹ 73,10,746/- on account of expenses on apartment and board. During the course of assessment proceedings the assessee has furnished details from wherein it is noticed that sum of ₹ 22,14,839/- was claimed on account of Guest Complimentary and further ₹ 8,03,909/- was claimed on account of Guest Supplies. The assessee was asked to furnish explanation in respect. However, no details/explanation have been furnished in this regard, and, hence, the aforesaid exp .....

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proceedings the nature of expenses incurred were fully explained. 02. The details of Guest Complimentary of ₹ 2214839 identify expenses incurred for Complimentary breakfast and MPA. MPA in hotel terminology represents modified American plain so as to identify Complimentary service of one major meal either lunch or dinner. 03. Hotel industry is a very competitive business. The world wise position reflects that each and every hotel is striving hard to maintain healthy occupancy rate. The fa .....

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also offered rooms with complimentary breakfast and complimentary one major meal either lunch or dinner. In such cases, room rent are credited in the accounts at gross rate with corresponding debit in Guest Complimentary on account of complimentary breakfast and one major meal. 05. The fact of Complimentary breakfast and one major meal is apparent from details submitted in the form of ledger print outs. Further more room rents being credited in the accounts on gross basis and reflected as such i .....

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lippers and other utilities of personal care. All such facilities are provided to guest to enjoy home comfort and to have a feeling of personal touch and care. The total cost, therefore, of ₹ 803909 is not significant as far as income from hotel operations are concerned. It however brings additional pleasure and comfort to all visiting guest which is reciprocated through increased income from hotel operations. 07. No part of expenses has been disallowed as bogus and inflated. The expenses .....

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the A.O. for his comments. The A.O. offered following comments in his remand report submitted vide his letter dated 19.11.2009 : "1. During the course of assessment proceedings the assessee was asked to give details of guest complimentary and guest supplies. However, assessee did not give detailed breakup of these expenses instead ledgers were submitted. Even during the course of Remand Report proceedings, the assesee has only submitted ledgers. No inference can be drawn from ledger because .....

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he ld. CIT(A) observed that during the appellate proceedings the AR of the assessee was required to produce evidence in support of complimentary breakfast and Modified American Plan. That in response the A.R. submitted a copy of its tariff plan which shows that complimentary breakfast was included in the room tariff. That from the details submitted by the assessee before the A.O. as well as before him, its claim of Guest Complimentary and Guest Supplies is found to be directly related to the bus .....

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supply of sundry cosmetics under the head guest complimentary the same is allowable. However, we note that as regards guest complimentary before the ld. CIT(A) the assessee has submitted that it was on account of complimentary breakfast and the accounting entry made was guest complimentary is debited and room rents are credited. This has been justified on the ground that room rent is debited on the gross amount which is inclusive of complimentary break fast and or meal. Now in this regard we fin .....

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