2017 (10) TMI 246 - AT - Income Tax

Taxability of catering revenue - Held that - Identical issue was considered by the co-ordinate bench in the assessee s own case relating to AY 2007-08 wherein deleted this addition as held that the amount retained by the assessee from the bills raised by the caterers would not be taxable under the principles of mutuality, since the said receipt cannot be considered as amount received from outsiders. The Co-ordinate bench observed that the assessee has received money from its members and paid to the caterers at a lower rate by retaining its share and hence it cannot be said that the transaction involves non-members. In the instant case also, we notice that the facts are almost identical. The outside caterer has given assessee s share by way of direct payment, the source of which is the collection from the members. Accordingly, consistent with the view taken by the coordinate benches, we set aside the order passed by Ld CIT(A) on this issue and direct the AO to delete the impugned addition. Interest income earned by the assessee from UTI and GOI tax free bonds - Held that - It is well settled proposition that the AO is not entitled to assess an income, which is otherwise exempt under the Act, since the AO is required to determine the total income in accordance with the law. Since the assessee claims that the above said interest income of ₹ 51.69 lakhs would be exempt u/s. 10(15) of the Act, we are of the view that the same requires examination at the end of the Assessing Officer. Accordingly, we set aside the order passed by the learned CIT(A) on this issue and restore the same to the file of the Assessing Officer with the direction to examine the claim for exemption u/s. 10(15) of the Act and take appropriate decision in accordance with law. Addition of interest income - claim of the assessee is that it has been added by the Assessing Officer without taking notice of the fact that the assessee itself has offered the same as its income in its original return of income and it has resulted in double taxation of same income - Held that - Since double taxation of same income is not permitted under the Act, we are of the view that this claim of the assessee also requires verification at the end of the AO. Accordingly we restore this issue to the file of the Assessing Officer. Determination of annual value of the property - Held that - Identical addition has been made by the Assessing Officer in A.Y. 2006-07. However, the Tribunal has restored the same back to the file of the Assessing Officer with the direction to verify the applicability of provisions of Maharashtra Rent Control Act, 1999 to the assessee s premises. Accordingly, consistent with the view taken by the Tribunal in A.Y. 2006-07, we set aside the order passed by the learned CIT(A) on this issue and restore the same to the file of the Assessing Officer with similar directions given by the Tribunal. Disallowance of payment of water charges made to BMC claimed by the assessee as part of municipal tax - Held that - As in assessee s own case for AY 2008-09 the assessee is in need of water to maintain the ground and other collateral purposes and accordingly, concluded that the expenditure incurred on water charges is necessary one and allowable under the provisions of section 23(1) of the Act. Since a particular view has already been taken by the co-ordinate bench on this issue, consistent with the view so taken, we set aside the order passed by Ld CIT(A) on this issue and direct the Assessing Officer to allow deduction of water charges/tax paid to BMC u/s. 23(1) of the Act. Applicability of MAT provisions to the assessee - Decide against assessee. MAT credit - assessee cannot be denied the benefit of MAT credit allowable as per the provisions of the Act.

Summary

Issues Involved:
1. Royalty Receipts
2. Deduction of Proportionate Expenditure Relating to Royalty Income
3. Taxability of Catering Revenue
4. Interest Income from UTI and GOI Tax-Free Bonds
5. Addition of Interest Income
6. Determination of Annual Value of Property
7. Disallowance of Payment of Water Charges
8. Disallowance under Section 14A of the Act
9. Applicability of MAT Provisions
10. Claim for MAT Credit
11. Claim of Depreciation on Addition Made in A.Y. 2007-08
12. Enhancement of Income by CIT(A)
13. Alternative Grounds to Ground No. 6
14. Grounds Not Pressed by the Assessee

Detailed Analysis:

1. Royalty Receipts:
The assessee did not press the ground relating to royalty receipts as it had already offered the same in the revised return of income. Consequently, this ground was dismissed as not pressed.

2. Deduction of Proportionate Expenditure Relating to Royalty Income:
The assessee requested that this issue be restored to the file of the AO for examination, similar to the directions given in AY 2007-08. The Tribunal agreed and restored this issue to the AO for examination in accordance with the law.

3. Taxability of Catering Revenue:
The assessee claimed exemption of catering revenue under the principles of mutuality. The AO and CIT(A) did not accept this claim for the amount received from outside caterers. However, the Tribunal noted that in a similar case (MIG Club Vs. ACIT), it was held that such receipts are not taxable under the principles of mutuality. Therefore, the Tribunal directed the AO to delete the impugned addition.

4. Interest Income from UTI and GOI Tax-Free Bonds:
The assessee claimed that interest income of ?51.69 lakhs is exempt under Section 10(15) of the Act. The Tribunal set aside the order of the CIT(A) and directed the AO to examine this claim and take a decision in accordance with the law.

5. Addition of Interest Income:
The assessee argued that interest income of ?233.03 lakhs was added twice, resulting in double taxation. The Tribunal restored this issue to the AO for verification and appropriate action.

6. Determination of Annual Value of Property:
The AO added 10% to the annual value reported by the assessee, which was confirmed by the CIT(A). The Tribunal restored this issue to the AO, directing verification of the applicability of the Maharashtra Rent Control Act, 1999, consistent with the Tribunal's decision in AY 2006-07.

7. Disallowance of Payment of Water Charges:
The AO disallowed the claim of water charges as part of municipal tax, which was upheld by the CIT(A). The Tribunal, following a previous decision, directed the AO to allow the deduction of water charges/tax paid to BMC under Section 23(1) of the Act.

8. Disallowance under Section 14A of the Act:
The Tribunal noted that similar matters were restored to the AO in previous years. Consistently, the Tribunal restored this issue to the AO for fresh examination in accordance with the law.

9. Applicability of MAT Provisions:
The Tribunal upheld the CIT(A)'s decision that MAT provisions apply to the assessee, consistent with previous Tribunal decisions.

10. Claim for MAT Credit:
The Tribunal found merit in the assessee's claim for MAT credit of ?109.11 lakhs and restored this issue to the AO for appropriate action as per the relevant provisions of the Act.

11. Claim of Depreciation on Addition Made in A.Y. 2007-08:
The Tribunal restored this issue to the AO, directing that it be decided after the receipt of the High Court's order, as the matter is consequential and dependent on the outcome of the appeal pending before the High Court.

12. Enhancement of Income by CIT(A):
The Tribunal noted that the CIT(A) enhanced the income without considering the assessee's written submissions. In the interest of natural justice, the Tribunal restored this issue to the CIT(A) for fresh examination after providing adequate opportunity to the assessee.

13. Alternative Grounds to Ground No. 6:
The Tribunal restored these alternative grounds to the CIT(A) for adjudication after providing adequate opportunity to the assessee, as they are contingent on the outcome of Ground No. 6.

14. Grounds Not Pressed by the Assessee:
The assessee did not press grounds Nos. 8 to 10, and accordingly, these grounds were dismissed as not pressed.

Conclusion:
The appeal filed by the assessee was treated as partly allowed for statistical purposes. The Tribunal restored multiple issues to the AO and CIT(A) for fresh examination and appropriate action in accordance with the law. The order was pronounced in the Court on 4.10.2017.