2014 (4) TMI 279 - HC - Income Tax

Deduction u/s 80HHD of the Act Held that - The Tribunal relied upon Hotel and Allied Trades Pvt. Ltd. v. Deputy CIT (Assessment) 2007 (4) TMI 120 - HIGH COURT, KERALA and the judgment is pending under consideration in civil appeal before the apex court - no interim order of any nature is granted thus, the order of the Tribunal is upheld Decided against Assessee. Levy of interest us 234C of the Act Held that - The decision in Joint CIT v. Rolta India Ltd. 2011 (1) TMI 5 - SUPREME COURT OF INDIA followed - Interest can be charged on the tax calculated on book profit under section 115JA(1). Income from other sources Disallowance of club expenses Held that - The Tribunal was justified in saying that the interest from bank and other dividends need to be assessed only as income from other sources and not the business income of the appellant-assessee u/s 56 of the Act - The matter for disallowance of club expenses is rightly remitted back to the AO by the Tribunal thus, there is no reason to interfere in any of the grounds raised Decided against Assessee.

Summary

Issues:
1. Deductions claimed by appellant-assessee under section 80HHD and interest levied under section 234C challenged.
2. Interpretation of previous court decision on section 80HHD claim.
3. Application of interest under section 234C based on apex court ruling.
4. Assessment of income from other sources and disallowance of club expenses.

Analysis:
1. The appellant-assessee, a hotel business company, contested the deductions claimed and interest levied under sections 80HHD and 234C for the assessment year 1997-98. The dispute centered around Rs. 1,95,243 as income from other sources and the incorrect calculation of deductions under section 80HHD by combining all units. Additionally, Rs. 23,350 was imposed as interest under section 234C. The appellant challenged the Tribunal's orders, leading to the current appeal.

2. Regarding the section 80HHD claim, a previous court decision in Hotel and Allied Trades Pvt. Ltd. v. Deputy CIT was cited, which ruled against the appellant-assessee. The Tribunal upheld this decision, citing the pending consideration of the earlier judgment by the apex court. Despite no interim order being granted, the Tribunal's reliance on the previous court decision was deemed legal and justified.

3. The issue of interest under section 234C was addressed with reference to the apex court's ruling in Joint CIT v. Rolta India Ltd., which concluded that interest could be charged on tax calculated on book profit under section 115JA(1). This ruling provided the basis for the Tribunal's decision on levying interest under section 234C.

4. Concerning the income from other sources amounting to Rs. 1,95,243, the Tribunal correctly determined that interest from bank and other dividends should be assessed under section 56 of the Income-tax Act as income from other sources, not as business income of the appellant-assessee. The matter of disallowance of club expenses was referred back to the Assessing Officer for clarification on whether the expenses were related to membership fees. The Tribunal's thorough examination of the controversies and consideration of relevant evidence and laws led to the dismissal of the appeal, as no valid grounds for interference were found.