2016 (10) TMI 1351 - AT - Income Tax

Addition on account of guest fees and hire charges - HELD THAT - As decided in own case 2013 (1) TMI 1031 - ITAT AHMEDABAD Revenue has not brought any contrary binding decision in its support nor has placed any material on record to demonstrate that the decisions of the Tribunal in assessee s own case for AY 200-07 has been set aside by Hon ble Jurisdictional High Court. We further find that reliance placed by the Revenue in the case of Sports Club of Gujarat Ltd. vs. CIT 1987 (10) TMI 21 - GUJARAT HIGH COURT are on different facts and therefore the ratio of the judgement is not applicable to the facts of the present case. In view of the aforesaid facts we find no reason to interfere with the order of the ld.CIT(A) and thus the ground of Revenue is dismissed. Disallowance of deduction claimed from income from other sources u/s 57(iii) - disallowance on account of income from other sources u/s57 which Assessee failed to prove to have been incurred wholly exclusively for the purpose of earning such interest income - HELD THAT - As from A. Y. 1989-90 onwards the issue had become settled i.e. the interest income would be charged as income from other sources and 10% of the same would be allowed as deduction for concerned expenses. In the A. Y. 2010- 11 the AO is raking up the controversy after 20 years on the issue which has not been agitated by either of the side. This is not the new issue to my mind therefore the principle of consistency required to be followed as has been held in various below mentioned case laws DCIT Vs. Sulabh International Social Service Organisation 2011 (3) TMI 526 - PATNA HIGH COURT CIT Vs. Ranganathar Co. 2007 (8) TMI 338 - MADRAS HIGH COURT Gopal Purohit 2010 (11) TMI 222 - SC ORDER Thus disallowance made by the A. O. is hereby deleted. Looking to the facts of the present case we find that assessee has been claiming 10% of the interest income and the same has been consistently allowed for last so many years. Therefore we find no reason to interfere with the order of ld. CIT(A). We uphold the same. This ground of Revenue is also dismissed.

Summary

Issues Involved:
1. Addition of guest fees, hire charges, and income from rooms.
2. Deletion of addition under section 57(iii) of the IT Act.

Issue 1: Addition of Guest Fees, Hire Charges, and Income from Rooms:
The appeal by the Revenue and the Cross Objection by the assessee for the Assessment Year 2010-11 challenged the order of the ld. CIT(A) XIV, Ahmedabad, regarding the addition of &8377; 1,31,17,183/- towards guest fees, hire charges, and income from rooms. The assessee, a mutual association running a club, contested the additions made during scrutiny assessment. The ld. CIT(A) deleted the impugned additions, leading to the Revenue appealing before the Tribunal. The Revenue raised two grounds against the deletion of the additions. The Co-ordinate Bench's decision in the assessee's favor for the preceding year was cited, emphasizing the doctrine of mutuality. The Tribunal dismissed the Revenue's grounds, upholding the decision of the ld. CIT(A) based on the principle of mutuality and past decisions in the assessee's case.

Issue 2: Deletion of Addition under Section 57(iii) of the IT Act:
The second ground of appeal concerned the deletion of the disallowance of &8377; 6,10,847/- claimed as 'income from other sources' under section 57 of the Act. The ld. Assessing Officer denied the claim made by the assessee, which was based on consistently allowed deductions of 10% of interest income. The ld. CIT(A) ruled in favor of the assessee, citing past decisions and the principle of consistency. The Co-ordinate Bench's decision from earlier years supported the deduction of 10% of gross receipts from interest as reasonable expenditure. The Tribunal upheld the decision of the ld. CIT(A) and dismissed the Revenue's ground, emphasizing the long-standing practice of allowing such deductions in the assessee's case.

In conclusion, the Tribunal upheld the decisions of the ld. CIT(A) in both issues, ruling in favor of the assessee and dismissing the appeals by the Revenue. The detailed analysis of each issue highlighted the application of legal principles, past decisions, and the doctrine of mutuality in determining the additions and deductions under scrutiny.