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TMI Blog2015 (9) TMI 1347X X X X Extracts X X X X X X X X Extracts X X X X ..... a company incorporated under the provisions of Companies Act, 1956 and is, inter-alia, engaged in the business of hotel and restaurants and activities incidental thereto, financing activities and wind power generation and sales. In the course of assessment proceedings, the substantive dispute raised by the Assessing Officer was with regard to the amount received by the assessee from Kamat Hotels (I) Ltd. on account of Management fee (Royalty). The Assessing Officer treated such income as income assessable under the head "Income from house property" whereas the assessee had returned the said income as 'business income'. The stand of the Assessing Officer was based on his stand in the assessment of the assessee in the past years. The CIT(A) h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... greement. Whatever the requirement of the hotel was there, I the same was made by KHIL with its own fund as agreed upon. The character of the asset was that the entire hotel which was run by the assessee itself earlier was given under the agreement to M/s. KHIL to run the hotel. Therefore, in our considered view, this was an I exploitation of commercial asset for business purpose and whatever the receipts are received from exploiting of commercial asset for business use are to be treated as business receipts. When the assessee was running this hotel, the receipts from the hotel were shown as business receipts and they were accepted. After giving to KHIL i.e. in the year 1994,the return was filed for assessment year 1995-96 showing the reven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edents, we allow the claim of the assessee that the Management fee (Royalty) received from Kamat Hotels (I) Ltd. is liable to be assessed as 'business income'. As a consequence, the Ground of appeal No.1 raised by the assessee stands allowed. 5. In the cross of appeal of the Revenue, the following Grounds of appeal Nos 1 to 3 have been raised which also relate to the income received by the assessee from Kamat Hotels (I) Ltd. 1) "On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in restricting the annual letting value to the annual rateable value determined by Brihan Mumbai Municipal Corporation, without appreciating the fact that if the rateable value under municipal laws does not represent the correct fair rent, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecision in the appeal of the assessee. Thus, the Grounds of appeal Nos. 1 to 3 in the appeal of the Revenue are dismissed. 6. Now, the only issue remaining in the appeal of the assessee as well as the cross-appeal of the Revenue, relates to the disallowance made by the Assessing Officer by applying section 14A of the Act amounting to Rs. 71,07,580/-. 6.1 In the Memo of appeal, initially the assessee raised the following Grounds of appeal on this aspect:- 2. DISALLOWANCE U/S.14A : i) On the facts and in circumstances of the case and in law, the Id. CIT(A) erred in confirming the double disallowance of Rs. 1,49,74,559/- already disallowed by the appellant u/s 36(1)(iii), and again considered for working of interest expenditure under Rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 41,524/- out of expenses incurred by the appellant." 6.4 Explaining the modified Grounds of appeal, it has been contended that the same is based on the legal position, which has developed subsequent to the filing of return and for that matter reference was made to the decisions of Mumbai Bench of the Tribunal in the cases of Garware Wall Ropes Limited (ITA No.5408/M/12 and ITA No.4957/M/12) dated 15/01/2014 and in the case of J.M. Financial Limited (ITA No.4521/M/12) dated 26/03/2014. 6.5 In so far as the cross-Grounds raised by the Revenue are concerned, the same read as under:- 4) "On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in directing the Assessing Officer to recompute the disallowance U/S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting exempt income, which view has been upheld by the Special Bench of ITAT, Ahmedabad in the case of Vishnu Anant Mahajan Vs. CIT (ITA No.3002/Ahd/2009 dtd. 25-05-2012) wherein the decision of the Hon'ble ITAT, Mumbai in the case of Dharamsingh Popat Vs. ACIT (ITA No.7534/Mum/2004 dtd. 06-01-2009) was approved by the Hon'ble ITAT Special Bench, Ahmedabad." 6.6 The aforesaid Grounds raised by the Revenue, ostensibly, relate to the partial relief allowed by CIT(A) in the context of disallowance under section 14A of the Act. 6.7 At the time of hearing, the Ld. Representative for the assessee had pointed that in the earlier year also, similar issue had come up before the Tribunal in A.Y 2006-07 as well as in A.Y 2007-08 vide orders date ..... X X X X Extracts X X X X X X X X Extracts X X X X
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