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2015 (9) TMI 1347 - ITAT MUMBAI

2015 (9) TMI 1347 - ITAT MUMBAI - TMI - Management fee (Royalty) received - Income from house property v/s business income - Held that:- As decided in assessment years 2007-08 and 2008-09 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’. - Decided in favour of the assessee

Disallowance applying section 14A - Held that:- In view of the above precedent, the matter was put to the parties .....

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g heard. - Decided in favour of assessee for statistical purposes. - ITA No.5855/MUM/2013, ITA No.5950/MUM/2013 - Dated:- 31-8-2015 - SHRI G.S.PANNU AND SHRI AMIT SHUKLA, JJ. For The Revenue : Shri Akhilendra Yadav For The Assessee : S/Shri R.C.Jain/ Arun Verma ORDER PER G.S.PANNU, A.M: The captioned cross-appeals by the Revenue and the assessee are directed against the order of the CIT(A) dated 29/07/2013, which in turn, has arisen from an assessment order dated 28/11/2011 passed by the Assessi .....

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ed 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) has also affirmed the stand of the Assessing Officer and accordingly, assessee is in appeal before us. 3. Before us, .....

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re of the view that there is no dispute that the assessee was running the hotel itself before giving to KHIL under agreement entered in the year of 1994. The entire activities of hotel carried out by the assessee itself before entering the agreement was given to KHIL, An interest free security was also obtained from KHIL, which was refundable after completion of period entered into between the parties. The assessee was sharing a revenue at the rate of 1 % of the revenue earned by the KHIL on acc .....

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pon. 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 .....

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eted under Section 143(3). The matter reached to the stage of the Tribunal, however, this issue was never disputed by the AO that the revenue receipt received from M/s. KHIL under the agreement are business receipt as they were accepted. Therefore, it cannot be said that any character of the revenue receipt has been changed in the year under consideration. In our considered view, the principle of consistency in the case in hand is applicable. Accordingly, the AO should have accepted the receipt .....

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ertion by the Revenue that the aforesaid precedents have been altered by any higher authority. Therefore, following the aforesaid precedents, 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 t .....

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vidence on record." 2) "On the facts and circumstances of the case and In law, the Ld. CIT(A) erred in restricting the Annual Letting Value of the Hotel comprising of land, building, machinery other common facilities like swimming pool, restaurants, club, gym etc, ignoring that the assessee had taken interest free security deposit of ₹ 80 crores from the tenant in lieu of reasonable rent." 3) "On the facts and circumstances of the case and in law, the Ld. CIT(A) erred i .....

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;ble Supreme Court in the case of DIT Vs. Transmarine Corporation (CA No.5407 of 2011)." The dispute in the said Grounds of appeal is rendered nugatory once the basic question of taxability of income received from Kamat Hotels (I) Ltd. as business income is decided in favour of the assessee. Therefore, as rightly pointed out by Ld. DR, the instant Grounds raised by the Department do not survive, following our decision in the appeal of the assessee. Thus, the Grounds of appeal Nos. 1 to 3 in .....

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ing the double disallowance of ₹ 1,49,74,559/- already disallowed by the appellant u/s 36(1)(iii), and again considered for working of interest expenditure under Rule 8D(2)(ii). The Ld. CIT(A) has not given any reason for double disallowance of interest. ii) The appellant submits that the appellant's claim against double disallowance out of interest is confirmed in the order dated 9-04-2012 by the Id. CIT(A) -17 in the case of the associate of the appellant, Mr Vithal V Kamat for Asstt .....

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1962(in short the Rules ). The CIT(A) has allowed partial relief by holding that the investment in partnership firm was liable to be excluded for computing the disallowance. 6.3 Presently, the assessee company has filed a modified Ground of appeal on this aspect, which reads as under:- DISALLOWANCE U/S. 14A: (a) On the facts and circumstances of the case, the Assessing Officer erred in making a further disallowance of ₹ 71,07,580/- u/s.14A of the Act read with Rule 8D of the rules. (b) The .....

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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 14A read with Rule 8D by taking into consideration only the tax exempt .....

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udible for the purpose of disallowance under Rule 8D read with Section 14A of the Act without appreciating that the share income from the partnership firm is exempt from tax u/s.10(2A) of the Act and consequently, provisions of Section 14A have to be applied in respect of any expenditure incurred by the assessee in relation to such income." 6) "On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in directing the Assessing Officer to exclude investment .....

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pecial 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 o .....

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