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M/s. Elel Hotels and Investments Ltd., Mandlik House, Mandlik Road, Colaba, Mumbai vs. DCIT, Central Circle-13, New Delhi
December, 05th 2018
         IN THE INCOME TAX APPELLATE TRIBUNAL
               DELHI BENCH: `B', NEW DELHI

        BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER
                          AND
          SH. O.P. KANT, ACCOUNTANT MEMBER


                      ITA No.4654/Del/2014
                     Assessment Year: 2010-11

M/s.    Elel   Hotels  and Vs. DCIT,
Investments Ltd.,              Central Circle-13, New Delhi
Mandlik    House,   Mandlik
Road, Colaba, Mumbai
PAN :AAACE2846D
        (Appellant)                   (Respondent)

                                And
                       ITA No.5058/Del/2015
                     Assessment Years: 2012-13

M/s.   ELEL     Hotels and Vs. ACIT,
Investments Ltd.,              Central           Circle-03,
R/o. Mandlik House, Mandlik    Jhandewalan, New Delhi
Road, Colaba, Mumbai
PAN :AAACE2846D
        (Appellant)                    (Respondent)

                                And
                       ITA No. 4807/Del/2014
                     Assessment Years: 2010-11

ACIT,                           Vs. M/s. ELEL Hotels and
Central Circle-13,                  Investments Ltd.,
New Delhi                           R/o.     Mandlik    House,
                                    Mandlik    Road,    Colaba,
                                    Mumbai
                                            PAN :AAACE2846D
         (Appellant)                       (Respondent)
                                 2
                                      ITA Nos.4807/Del/2014; 4654/Del/2014
                                           5434/Del/2015; 5435/Del/2015 &
                                                             5058/Del/2015

                             And
                ITA Nos. 5434 & 5435/Del/2015
             Assessment Years: 2011-12 & 2012-13

ACIT,                           Vs. M/s. ELEL Hotels and
Central Circle-03,                  Investments Ltd.,
New Delhi                           R/o.     Mandlik    House,
                                    Mandlik    Road,    Colaba,
                                    Mumbai
                                            PAN :AAACE2846D
         (Appellant)                       (Respondent)


             Assessee by   Sh. Rohit Jain, Adv. &
                           Ms. Manisha Sharma, Adv.
             Department by Ms. Ashima Neb, Sr. DR


                        Date of hearing                28.11.2018
                        Date of pronouncement          04.12.2018

                             ORDER

PER O.P. KANT, AM:

      Out of the aforementioned appeals, the cross appeals
having ITA No. 4807/Del/2014 and ITA No. 4654/Del/2014 are
directed against order dated 19/06/2014 passed by the Ld.
Commissioner of Income-tax (Appeals)-1, New Delhi [in short "the
Ld. CIT(A)"] for assessment year 2010-11; the appeal having ITA
No. 5434/Del/2015 is directed against order dated 11/06/2015
passed by the Ld. Commissioner of Income-tax (Appeals)-23, New
Delhi [in short "the Ld. CIT(A)" ] for assessment year 2011-12; the
cross appeals having ITA No. 5435/del/2015 and ITA No.
5058/Del/2015 are directed against order dated 11/06/2015
                                    3
                                          ITA Nos.4807/Del/2014; 4654/Del/2014
                                               5434/Del/2015; 5435/Del/2015 &
                                                                 5058/Del/2015

passed by the Ld. Commissioner of Income-tax (Appeals)-23, New
Delhi [in short the Ld. CIT(A)] for assessment year 2012-13. In
these appeals, common issues are involved in identical set of
circumstances and thus same were heard together and disposed
off by way of this consolidated order for convenience.


ITA No.4807/Del/2014 (Revenue's appeal) for AY: 2010-11
ITA No. 4654/Del/2014 (Asessee's appeal) for AY: 2010-11
2.    First we take up the cross appeals of the Revenue and the
assessee     having    ITA      No.4807/Del/2014         and     ITA     No.
4654/Del/2014       respectively for assessment year 2010-11. The
grounds of the appeal raised by the Revenue are reproduced as
under:


     1.   The order of Ld. CIT(A) is not correct in law and facts.
     2.   On the facts and circumstances of the case the Ld. CIT(A)
          has erred in restricting the disallowance to Rs.53,00,209/-
          and allowing a relief of Rs.1,24,65,791/- made by
          Assessing Officer without appreciating the fact that the
          assessee company had not received any income from the
          business activity for the year under consideration.
     3.   The appellant craves leave to add, amend any/all the
          grounds of appeal before or during the course of hearing of
          the appeal.

2.1 Grounds       of   appeal    raised   by   the    assessee      in   ITA
No.4654/Del/2014 are reproduced as under:


     1.   That the Commissioner of Income Tax (Appeals) [`CIT(A)']
          erred on facts and in law in upholding disallowance of
          expenditure to the extent of Rs.53,00,209, on the ground
          that the same should be capitalized to the cost of building.
                                 4
                                        ITA Nos.4807/Del/2014; 4654/Del/2014
                                             5434/Del/2015; 5435/Del/2015 &
                                                               5058/Del/2015


     1.1 That the CIT(A) erred on facts and in law in not providing
         adequate opportunity of being heard to the appellant
         before affirming the above disallowance.
     1.2 That the CIT(A) erred on facts and in law in not
         appreciating that aforesaid expenditure could not be
         capitalized inasmuch as the same represents the amount
         paid to consultants whose architectural plans/ concepts
         were rejected by the appellant.
     2. That on the facts and circumstances of the case, the ClT(A)
         erred in not adjudicating the ground relating to action of
         the assessing officer in not allowing carry forward of
         unabsorbed depreciation claimed by the appellant on the
         ground that during the year under consideration, assets
         were not used for business purposes.

         The appellant craves leave to add, alter, amend or vary
         the above grounds of appeal before or at the time of
         hearing."

3.    Briefly stated facts of the case are that the assessee
company filed return of income for year under consideration on
13/10/2010 declaring total loss of Rs.2,03,89,879/-. The case
was selected for scrutiny and notice under section 143(2) of the
Income-tax Act, 1961 (in short `the Act' ) was issued and complied
with. The assessee company claimed that it was engaged in the
business of running hotels and restaurant and owned a hotel,
namely, "SeaRock" in the Bandra, Mumbai. The Assessing Officer
observed that assessee shown receipt from interest on deposit of
Rs. 8000 and miscellaneous income of Rs. 19,000, totaling to Rs.
27,000/-and      against   the       said   receipt      expenses        of
Rs.50,33,40,000/-had been claimed in the profit and loss
account. In view of the observation, the Assessing Officer was of
                                 5
                                      ITA Nos.4807/Del/2014; 4654/Del/2014
                                           5434/Del/2015; 5435/Del/2015 &
                                                             5058/Del/2015

the opinion that entire receipt represented `income from other
sources ' and no business activity has been carried out by the
assessee. Accordingly, he called upon the assessee as why the
expenses claimed by the assessee and corresponding business
loss may not be disallowed. The assessee contended that there
was a temporary suspension of the business with the object of
tiding over the crisis conditions and the expenses such as rent,
security expense, repair and maintenance, electricity, insurance
etc were incurred to maintain the corporate structure and
preserve and maintain the assets/infrastructure as the company
had to maintain all the licenses for operation of the Hotel. The
assessee submitted that all the expenses were incurred wholly
and exclusively for the purpose of the business, which are
allowable as deduction. The assessee submitted that expenditure
incurred to maintain and preserve the corporate structure is in
allowable deduction in view of the following precedents:
    (i)   CIT Vs. Rampur Timber Company Limited, 129 ITR
          58(Allahabad HC)
    (ii) Nakodar Bus Services Private Ltd., 179 ITR 506 (Punjab
          HC)
    (iii) Chinai & Co. Private Ltd. Vs. CIT, 206 ITR 616 (Bom HC)
    (iv) Hindustan Chemicals Works Ltd. Vs. CIT, 124 ITR 561
    (v) Birla Cotton Spinning and Weaving Mills Ltd. Vs. CIT, 64
          ITR 568, 584 (Cal.)
3.1 The Assessing Officer, however, noted that in earlier
assessment years 2005-06 to 2009-10 also similar situation was
observed. In view of the Assessing Officer, the assessee had no
                                 6
                                      ITA Nos.4807/Del/2014; 4654/Del/2014
                                           5434/Del/2015; 5435/Del/2015 &
                                                             5058/Del/2015






income at all from operations of the Hotel business and whatever
income by way of interest was shown under the head `income
from other sources'. According to the Assessing Officer only the
government dues paid as rates and taxes amounting to Rs. 26,
51,000/-are allowable as the same were incurred for keeping the
company in existence. The Ld. that Assessing Officer noted that
depreciation of Rs.48,29,23,000/-was already disallowed and
headed back to the income by the assessee thus the balance
amount of expenditure computed as Rs.1,77,66,000/-was held as
disallowable. The Assessing Officer also denied carry forward of
the unobserved depreciation in absence of any business activity
and assets not being used for the purpose of the business.
Aggrieved with the finding of the Assessing Officer, the assessee
filed appeal before the Ld. CIT(A) and reiterated its claim that the
business of Hotel activity was suspended temporarily and various
expenses were incurred to maintain the corporate structure,
preserve and maintain the assets, the infrastructure and
maintain all the licenses for the operation of the Hotel and thus
expenses were incurred wholly and exclusively for the purpose of
the business. The assessee relied on number of decisions. The
assessee submitted that all the conditions of section 37(1) of the
Act, were duly complied with by the assessee and thus all the
expenses claimed should be allowed to it.
3.2 The Ld. CIT(A) after considering the submissions assessee
observed as under:
                                       7
                                             ITA Nos.4807/Del/2014; 4654/Del/2014
                                                  5434/Del/2015; 5435/Del/2015 &
                                                                    5058/Del/2015

    " .........................
    Facts are that the Appellant company owns hotel `Searock' in Mumbai.
    The said hotel was destroyed a few years ago, and the appellant
    company along with the hotel property was sold by its earlier owners.
    The hotel business has not yet restarted as the structure requires
    comprehensive repairs and refurbishing, and necessary government
    approvals are still being taken. From the details filed, I find that expenses
    claimed by the appellant include certain items of expenditure which are
    essential for running day to day operations of the company and others
    which are to be capitalized:

SI. Description                                       Amount        Allowable
                                                      (Rs.)
   Lease rent paid to Government of Maharashtra in 6,875,198        6,875,198
1 respect of the land on which the hotel structure is
   located
   Consultancy charges for various works relating to 6,316,372      1,016,163
2 the hotel and for representation before different
   authorities
3 Auditors remuneration                               386,000       386,000
4 Personnel expenses                                  914,000       914,000
5 Security expenses                                   1,462,000     1,462,000
6 Power, fuel and water                               859,000       859,000
7 Communication expenses                              260,000       260,000
8 Travelling expenses                                 245,000       245,000
9 Insurance                                           162,000       162,000
10 Repairs and maintenance                            62,000        62,000
11 Miscellaneous expenses                             233,919       233,919
                                              TOTAL 17,775,489      12,475,280




3.3 Out of the list of the expenses of Rs.1,77,75,489/- the Ld.
CIT(A) held the expenses amounting to Rs.53,00,209/- paid to
consultants as disallowable under section 37(1) of the Act being
capital expenditure and the balance expenses of Rs.1,24,65,791/-
were allowed as business expenditure for preservation of business
and protection of assets and property observing as under:
                                      8
                                             ITA Nos.4807/Del/2014; 4654/Del/2014
                                                  5434/Del/2015; 5435/Del/2015 &
                                                                    5058/Del/2015

     "3.3 Of the above items, expenses on lease rent, auditors
     remuneration, personnel expenses, expenses on security of the
     property of the company, expenditure on power and water, travelling
     and communication, insurance and expenses on repairs and other
     incidentals are also essential for preserving and maintaining the
     hotel property owned by the appellant company are also bare
     minimum expenses required for maintaining the company and its
     assets. It was held in Birla Cotton Spinning & Weaving Mills Ltd. vs.
     CIT [64 ITR 568, 584 (Cal.)] that business includes day-to-day
     running of the business, preservation of business and protection of
     its assets and property from expropriation, coercive process or
     hostile title, payment of statutory dues and taxes and things
     incidental to carrying on business and expenses relating thereto
     were allowable business expenses. This ruling was affirmed by the
     Hon'ble Supreme Court [82 ITR 166], I am also of the view that these
     expenses on security, electricity and water are outright consumables
     and cannot be capitalized as these expenses do not add any value
     to the capital asset.

     3.4 However, from the details filed I find that amount totaling
     Rs.53,00,209/- was paid to consultants for planning and concept
     design, architectural services, designing of AC & ventilation system
     and basement work relating to the hotel structure. As the hotel
     structure is yet to be completed and the business is yet to
     commence, these expenses directly relating to the hotel building are
     to be capitalized towards the cost of building. In these facts and
     circumstances of the case, the expenses claimed by the appellant
     are disallowed to the extent of Rs.53,00,209/-, which shall be
     added to the capital cost of the hotel building.


3.4 Aggrieved with the order of the Ld. CIT(A), both the Revenue
and the assessee are in the appeal before the Tribunal, raising the
grounds as reproduced above.
4.       The ground Nos. 1 and 3 of the appeal of the Revenue are
general in nature and thus, we are not required to adjudicate
upon specifically.
4.1 The ground No.2 of the appeal of the Revenue relates to
relief     of   Rs.1,24,65,791/-allowed          out     of    addition       of
Rs.1,77,66,000/- by the Ld. CIT(A) holding the expenses as
                                 9
                                      ITA Nos.4807/Del/2014; 4654/Del/2014
                                           5434/Del/2015; 5435/Del/2015 &
                                                             5058/Del/2015

business expenditure. The ground No. 1 to 1.2 of the appeal of
the assessee relate to amount to Rs.53,00,209/- sustained by the
Ld. CIT(A) out of the addition of Rs.1,77,66,000/-. Both the
grounds are connected with the same addition in dispute.
4.2 On the issue of relief allowed by the Ld. CIT(A), the Ld. DR
relying on the order of the Assessing Officer submitted that for
last many years the assessee has not carried out the activity of
the Hotel operations and only earned income by way of interest,
which has been offered under the head `income from other
sources ' and thus expenditure other than the government dues
should not be allowed to the assessee.
4.3 On the other hand, the Ld. counsel of the assessee
submitted a paper-book containing pages 1 to 54 and , reiterated
the submissions made before the lower authorities . He submitted
that Hotel property owned by the assessee was damaged in bomb
blast and it was in the process of reconstruction/renovation and
the expenses have been incurred for consultancy in respect of
reconstruction/renovation and maintenance of the building as
well as retaining of various licenses issued to the hotel. According
to him, it was only a temporary suspension of the business of the
running of the Hotel and the expenses were incurred to preserve
the assets of the business. He submitted that in the assessment
year 2008-09, similar disallowance was made by the Assessing
Officer, which has been deleted by the Ld. CIT(A) and on further
appeal, the Tribunal dismissed the appeal of the Department
holding that the expenditure incurred by the assessee was wholly
exclusively for the purpose of the business though there was a
                                 10
                                           ITA Nos.4807/Del/2014; 4654/Del/2014
                                                5434/Del/2015; 5435/Del/2015 &
                                                                  5058/Del/2015

temporary lull in the business. The Ld. counsel further submitted
that in subsequent assessment years 2013-14 and 2014-15 no
disallowance has been made by the Assessing Officer himself. In
support of the contention that expenditure incurred for the
purpose of the business is on allowable deduction even though
same does not result in the running of the income, the Ld.
counsel relied on the decisions of Hon'ble Supreme Court in the
case of CIT versus Malayalam Plantation Ltd 53 ITR 140 and CIT
versus Birla cotton spinning and weaving Mills Ltd 82 ITR 166. In
support of the contention that expenses incurred by the assessee
during   temporary    suspension      of     business      are     allowable
deduction, the Ld. counsel relied on the decision of the Hon'ble
Supreme Court in the case of CIT versus Vikram cotton Mills Ltd
169 ITR 597 and decision of the coordinater bench of the
Tribunal in the case of Lodhi Property Company Limited versus
DCIT in ITA No. 4851/del/2011.
4.4 On the issue of expenditure of Rs.53,00,209/-sustained by
the Ld. CIT(A), the Ld. counsel of the assessee submitted that the
amount incurred represented the amount paid to consultant
whose architectural plans/concepts were rejected by the assessee
and thus it was in the nature of revenue expenditure and
allowable to the assessee.
4.5 On the contrary, the Ld. DR submitted that no evidences to
substantiate the claim that expenditure represented the amount
paid to consultant whose architectural plans/conceptual rejected
by   the assessee,   were    submitted       either    before the       lower
                                      11
                                              ITA Nos.4807/Del/2014; 4654/Del/2014
                                                   5434/Del/2015; 5435/Del/2015 &
                                                                     5058/Del/2015

authorities or before the Tribunal and thus this argument of the
assessee cannot be considered for deciding the issue in dispute.
4.6 We have heard the rival submissions and perused the
relevant material on record. The assessee company is owner of a
Hotel property, which is not in operation for last few years. The
assessee       company      has        incurred        expenses         totaling
Rs.1,77,75,489/-on Lease rent to government of Maharashtra in
respect of land on which hotel structure is located, consultancy
charges for works related to hotel and for representation before
different authorities, auditor remuneration, Personnel expenses,
security   expenses,     power    fuel      and    water,     communication
expenses, travelling expenses, insurance expenses, repair and
maintenance expenses etc. The amount of each expenditure has
been mentioned in the finding of the Ld. CIT(A), which we have
reproduced in earlier Paras of this order . The contention of the
assessee is that these expenses are being incurred for preserving
and maintaining the hotel property owned by the assessee
company and therefore allowable as business expenditure in
terms of section 37(1) of the Act. The Ld. CIT(A) has allowed the
business expenditure except the amount of Rs.53,00,209/- paid
to consultant for planning and concept design, architecture
services, designing AC and ventilation system and basement
work-related    total    structure,        which   are    held     as    capital
expenditure. The assessee is contesting that the expenditure of
Rs.53,00,209/-is also in the nature of Revenue expenditure. The
Revenue is contesting that no business activity has been carried
out by the assessee for past many years and therefore the
                                   12
                                         ITA Nos.4807/Del/2014; 4654/Del/2014
                                              5434/Del/2015; 5435/Del/2015 &
                                                                5058/Del/2015

expenditure is not allowable as business expenditure.             We find
that the assessee has filed details of expenses ledgers in books of
accounts along with vouchers of expenses. On page 30 of the
paper book we find that detail of consultancy expenses is
summarized. We find that the Ld. CIT(A) has held following
amounts totaling to Rs.53,00,209/- as capital expenditure:
  1. Planning and concept design in 3-D expenses for Project
     Island at lands End Bandra amounting to Rs.31,93,926/-
     paid to a Stackins International Ltd.
  2. Architectural services expenses amounting to Rs.19,11,058/-
     paid to HN Portman and associate., Inc.
  3. Designing and ventilation system expenses amounting to
     Rs.1,12,500/-paid to Bagati Enterprises.
  4. Expenses on Advice on basement work at SeaRock Hotel
     amounting to Rs.82,725/- paid to Hapan.

4.7 The only argument which has been advanced by the learner
counsel   of   assessee   before    us   that     above     architectural
plan/concept provided by above mentioned parties were not
executed, however no documentary evidence have been filed
before us or before the lower authorities to substantiate the above
claim. In our opinion, the finding of the Ld. CIT(A) of holding the
expenses as capital expenditure is well reasoned in view of the
evidences is available on record. Evidently all these expenses are
towards creation of a new asset or for enhancing the capacity of
the existing asset and thus same are in the nature of capital
expenditure. We do not find any error in the finding of the Ld.
CIT(A) on this issue.
                                        13
                                              ITA Nos.4807/Del/2014; 4654/Del/2014
                                                   5434/Del/2015; 5435/Del/2015 &
                                                                     5058/Del/2015

4.8 Similarly on the issue of holding the remaining expenses of
Rs.1,24,65,791/-, the Ld. CIT(A) has analysed all the expenses
and    found that same           have    been    incurred essentially         for
preserving and maintaining the hotel property owned by the
assessee. The lease rent expenses paid to government of
Maharashtra are in respect of the land on which hotel is located,
which is one of the essential expenditure to preserve the assets of
the company. Similarly the expenses on Auditor's remuneration,
personnel expenses, security expenses, power and fuel and water
expenses are all expenses necessary for maintenance of the hotel
property. The Tribunal in assessment year 2008-09 in the case of
the assessee itself, in ITA No. 1080/Del/2014 has allowed the
similar expenses as business expenditure of observing as under:


      "8. We have heard the rival submissions and perused the material
      available on record. A perusal of the same would show that before
      the Assessing Officer, the assessee vide its letter dated 15.11.2010
      has submitted that the expenditure incurred is for maintaining its
      corporate    structure    in   existence    and      preserving   the
      assets/infrastructure. The said explanation has been extracted in
      para 2.2 of the assessment order. It has also been submitted that
      the assessee company has claimed that it has maintained all
      necessary licenses etc. required for the operation of a hotel. We
      pause here and find on going through the material available on
      record and considering the arguments of the Ld. Sr. DR. that nothing
      has been brought on record by the Revenue to show that the facts as
      narrated by the assessee before the Assessing Officer and not
      disputed by the Revenue are no longer true or have all along been an
      incorrect assertion of facts. We further find that referring to the
      details of the expenditure which have been extracted in the earlier
      part of this order the assessee has submitted that the expenses
      were bonafide and were necessary government dues which
      statutorily are required to be paid and have been necessarily
      incurred for keeping its business alive. We fail to comprehend the
      relevance of the facts reference to which has been made by the AO
      namely in the proceedings under section 153A read with section
      143(3) in 2005-06 AY. The Revenue has submitted that business still
                                  14
                                         ITA Nos.4807/Del/2014; 4654/Del/2014
                                              5434/Del/2015; 5435/Del/2015 &
                                                                5058/Del/2015

has not commenced even today an argument unsupported by any
fact. The ld.AR also responded again without any evidence that the
assessee was on the look out for a partner and/or for a take
over/amalgamation options as the costs of renovation are prohibitive
and the assessee is managing to keep and protect its corporate
entity alive and carrying out whatever renovations the financial
position permits. We find that all these arguments based on
probabilities and possibilities are of no relevance. What is relevant is
that all necessary licenses etc. required to keep the hotel business
alive are being maintained by the assessee. The Assessing Officer
himself was convinced that "the government dues" being the
minimum statutory expenses were allowable and as a result thereof
he has allowed "duties and taxes", "insurance of assets", "license
fees" and "MVAT expenses". Considering the nature of expenses
which have been allowed by the AO, we find no good reason why
"water expenses" and "electricity expenses" can be disallowed. We
also find no good reason why security charges paid to secure the
assets of the assessee can be disallowed as maintenance of
physical assets and securing the property from vandals, trespassers
etc. is the bare minimum expenditure necessarily required to be
incurred. Similarly, salary of one Accountant and one office boy can
hardly be said to be an expenditure which was not incurred wholly
and exclusively for the business of the assessee. "






8.1. While arriving at the conclusion, we have taken into
consideration the decision relied upon by the Ld. Sr. DR that is
CIT(A) vs PIEM Hotel Private Limited (cited supra). On a perusal of
the same, it is seen that the issue before the Hon'ble Bombay High
Court was whether the business could have been said to have been
"set up" or not. The business being hotel business. Considering the
fact that only a banquet Hall which had been completed at the
relevant point of time which had been let out the claim of the
assessee that income was from hotel business was not allowed. The
Hon'ble Court came to the conclusion that the hotel business could
not be said to have been set up simply because a banquet hall was
let out because unless the hotel building was completed the Hon'ble
Court held that the gamut of activities which a hotel is required to
undertake cannot be said to have been ready for use and thus
merely because the banquet Hall was ready in the incomplete hotel
building the hotel business it was held could not have been set up.
We find on consideration of the principle laid down therein, on the
facts available and the issue under consideration by the Court it is
seen that it has no bearing on the facts of the present case.

8.2. Accordingly considering the judicial precedents relied upon and
the facts and circumstances of the case, we find that the decision
arrived at in the peculiar facts and circumstances of the case fully
                                         15
                                               ITA Nos.4807/Del/2014; 4654/Del/2014
                                                    5434/Del/2015; 5435/Del/2015 &
                                                                      5058/Del/2015

      supports the impugned order. A temporary lull at a point of time in
      the business of the assessee in the absence of any fact or evidence
      to the contrary cannot lead to the conclusion in the peculiar facts
      and circumstances of the case that the business has permanently
      closed especially in view of the fact that as per the assertions of the
      assessee before the Assessing Officer that its licenses etc are being
      maintained and kept intact ensuring that the hotel is ready for
      operation. A fact which has not been disputed as license fees have
      been allowed by the AO himself."

4.9 We also note that in assessment year 2013 -14 and 2014-
15,    the    assessee        claimed    similar   expenses      as    business
expenditure and same have been allowed by the Assessing Officer
in assessment order passed under section 143(3) of the Act.
4.10      In view of the aforesaid discussion and respectfully
following the decision of the Tribunal (supra), we uphold the
finding      of   the   Ld.     CIT(A)    in   holding    the    expenses         of
Rs.1,24,65,791/- as business expenditure.
4.11 The ground No. 2 of the appeal of the Revenue as well as
Ground Nos. 1 to 1.2 of the appeal of the assessee are accordingly
dismissed.
5.     In ground No. 2 of the appeal, the assessee has raised the
issue that Ld. CIT(A) has not adjudicated the ground of the appeal
of the assessee against not allowing carry forward of the
unabsorbed depreciation claimed by the assessee.
5.1 On        perusal    of    the   assessment      order,     we    find      that
depreciation in the year under consideration was added back by
the assessee in the computation of the income and thus we do
not understand how the assessee is claiming carry forward of the
said depreciation as unabsorbed depreciation. On perusal of the
grounds of appeal raised before the Ld. CIT(A), we find that the
                                 16
                                       ITA Nos.4807/Del/2014; 4654/Del/2014
                                            5434/Del/2015; 5435/Del/2015 &
                                                              5058/Del/2015

issue of disallowing carry forward of unabsorbed depreciation was
raised in ground No. 2. The Ld. CIT(A) has also reproduced the
submission of the assessee in the impugned order, where the
assessee itself has not pressed for adjudication of the ground No.
2. Thus it is evident that Ld. CIT(A) has not adjudicated the
ground in view of the ground not pressed by the assessee. In the
circumstances, we do not find any error in the order of the Ld.
CIT(A) on the issue in dispute and accordingly, we dismiss the
ground No. 2 of the appeal of the assessee.
6.    In the result, the appeals of the assessee and the Revenue
for assessment year 2010-11 are dismissed.


ITA No. 5434/Del/2015 (Revenue's appeal) for AY: 2011-12
7.    In assessment year 2011-12, the Revenue has filed appeal
against the order of the Ld. CIT(A), which has been entered at ITA
No. 5434/del/2015. The grounds of appeal are reproduced as
under:


     1. The order of Ld. CIT(A) is not correct in law and on facts.
     2. On the facts and circumstances gf-The case the Ld. CIT (A)
         has erred in law in deleting the addition of Rs.
         1,31,93,000/- on account of disallowance of expense -
         claimed by the assessee company in the P & L A/c for the
         year under consideration in the absence of any business
         activity. The essential feature that the expenses should not
         only be incidental or necessary, but it should be "wholly
         and exclusively" for the purpose of business, has not been
         satisfactorily brought out by the assessee company.
     3. That the department has not accepted the order of CIT(A)
         in A.Y. 2010-11 and department has preferred an appeal
         before Hon'ble ITAT on the issue.
                                  17
                                        ITA Nos.4807/Del/2014; 4654/Del/2014
                                             5434/Del/2015; 5435/Del/2015 &
                                                               5058/Del/2015

     4. The appellant craves leave to add, amend any/all the
         grounds of appeal before or during the course of hearing of
         the appeal.

8.    The ground No. 1 and 4 of the appeal are general in nature
and therefore we are not required to adjudicate upon.
9.    The issue raised in ground Nos. 2 and 3 of the appeal is
identical to the ground No. 2 of the appeal of the Revenue in
assessment year 2010-11 except amount involved. Accordingly, to
have consistency in our decision, following our finding on the
issue in earlier Paras of this order, the ground numbers 2 and 3
of the appeal are dismissed.
10. In the result, the appeal of the Revenue for assessment year
2011-12 is dismissed.


ITA No.5435/Del/2015(Revenues' appeal) for AY:2012-13
ITA No.5058/Del/2015(Assessee's appeal) for AY: 2012-13


11. In assessment year 2012-13, both the Revenue and the
assessee have filed appeals, having ITA No. 5435/Del/2015 and
5058/Del/2015 respectively. The grounds of appeal of the
Revenue are reproduced as under:
     1.   The order of Ld. CIT (A) is not correct in law and on facts.
     2.   On the facts and circumstances of the case the Ld. CIT (A)
          has erred in law in deleting the addition of Rs.
          15,84,54,621/- on account of disallowance of expense-
          claimed by the assessee company in the P & L A/c for the
          year under consideration in the absence of any business
          activity. The essential feature that the expenses should not
          only be incidental or necessary, but it should be "wholly
                                 18
                                       ITA Nos.4807/Del/2014; 4654/Del/2014
                                            5434/Del/2015; 5435/Del/2015 &
                                                              5058/Del/2015

         and exclusively" for the purpose of business, has not been
         satisfactorily brought out by the assessee company.
    3.   That the department has not accepted the order of CIT(A)
         in A.Y. 2010-11 and department has preferred an appeal
         before Hon'ble ITAT on the issue.
    4.   The appellant craves leave to add, amend any/all the
         grounds of appeal before or during the course of hearing of
         the appeal.

11.1 The    grounds     of   appeal   of     the   assessee     in    ITA
No.5058/Del/2015 are reproduced as under:


    1.   On the facts and in the circumstances of the case, the
         Learned Commissioner of Income Tax (Appeals)  has
         erred in sustaining the disallowance of Rs.13,23,600/-
         paid to Sunil Ambre & Associates.

    2.   The Appellant Craves to add, alter, or amend, the above
         Grounds of appeal before or during the course of hearing of
         the appeal.

12. We find that grounds of appeal raised by the Revenue are
identical to the ground raised in assessment year 2011-12, except
change of amount involved, accordingly, following our finding in
assessment 2011-12, we dismiss the grounds of appeal of the
Revenue.
13. The assessee in its appeal has raised the issue of
disallowance   of   Rs.13,23,600/-    paid    to   Sunil   Ambre     and
Associates. The Ld. CIT(A) has held the said expenditure is in the
nature of capital expenditure. The identical issue was raised by
the assessee in ground No. 1 for assessment year 2010-11, which
has been dismissed by us. To have consistency in our decision,
                                  19
                                        ITA Nos.4807/Del/2014; 4654/Del/2014
                                             5434/Del/2015; 5435/Del/2015 &
                                                               5058/Del/2015

following our finding in assessment year 2010-11, this ground of
the appeal is also dismissed.
14. In the result, the appeal of Revenue and the assessee for
assessment year 2012-13 are dismissed.
15. To sum up, the appeals of the Revenue for assessment years
2010-11, 2011-12 and 2012-13 are dismissed and appeal of the
assessee for assessment years 2010-11 and 2012-13 are also
dismissed.


        Order is pronounced in the open court on 4th December, 2018.




              Sd/-                              Sd/-
           H.S. SIDHU                        O.P. KANT
        JUDICIAL MEMBER                 ACCOUNTANT MEMBER

Dated: 4th December, 2018.
RK/-(D.T.D.)
Copy forwarded to:
1.     Appellant
2.     Respondent
3.     CIT
4.     CIT(A)
5.     DR


                                              Asst. Registrar, ITAT, New Delhi

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