9911796707
|
Home
Issues Involved:
1. Whether the additions under section 68 for assessment years 2004-05 and 2005-06 are liable to be deleted or confirmed. 2. Whether the addition on account of reimbursement of expenses to M/s. Cox & King (India) (P.) Ltd. and M/s. Tulip Star Hotels (P.) Ltd. for assessment years 2004-05 and 2005-06 are liable to be deleted or confirmed. Issue-wise Detailed Analysis: 1. Additions under Section 68: The first point of difference revolves around the additions of Rs. 4,78,12,403 and Rs. 1,02,91,176 made under section 68 for assessment years 2004-05 and 2005-06, respectively. The assessee argued that the amounts were advances from Shri Somendra Khosla of UAE for acquiring space on a 99-year lease basis. The assessee provided extensive documentation, including correspondence, confirmation of advance, remittance details, and a certificate from Citibank, Mumbai, certifying the inward foreign remittance. The learned counsel for the assessee contended that the identity, creditworthiness, and genuineness of the transaction were established through various pieces of evidence such as the passport, Chartered Accountant's certificate, utility bills, and newspaper articles. The learned Departmental Representative (DR) countered that the identity of the creditor was not proved before the Assessing Officer, the transaction was not genuine, and the evidence provided was of a subsequent period. The Third Member noted that the onus is on the assessee to prove the cash credit by establishing the identity, creditworthiness, and genuineness of the transaction. The evidence included a Chartered Accountant's certificate, passport, trade license, and utility bills, which were sufficient to establish the identity and creditworthiness of Shri Somendra Khosla. The genuineness of the transaction was supported by the remittance certificates and the business activities of Shri Khosla. Despite the DR's objections regarding the timing of the evidence and the lack of opportunity for the Assessing Officer to cross-examine the additional evidence, the Third Member concluded that the assessee had duly established the identity, creditworthiness, and genuineness of the transaction. Therefore, the additions under section 68 were liable to be deleted. 2. Reimbursement of Expenses: The second point of difference involved the addition on account of reimbursement of expenses to M/s. Cox & King (India) (P.) Ltd. and M/s. Tulip Star Hotels (P.) Ltd. The assessee had agreements with these entities for operating and marketing the hotel property. The expenses incurred by these entities were reimbursed by the assessee, who then raised debit notes to recover these amounts from Tulip Hospitality Services Ltd. (THSL). The learned counsel for the assessee argued that the assessee was merely an intermediary and did not actually incur the expenses. The expenses were incurred by Cox & King and Tulip Star Hotels and were reimbursed by THSL. Therefore, the question of disallowance in the assessee's hands did not arise. The learned DR contended that the assessee had not proved the services rendered by Cox & King or Tulip Star Hotels and that the expenses should be disallowed. However, the Third Member found that the assessee had not claimed any deduction for these expenses in its profit and loss account. The total expenditure debited was only Rs. 86,97,337, which did not include the amounts reimbursed to Cox & King or Tulip Star Hotels. Since the assessee did not claim the deduction, the question of disallowance did not arise. The Third Member concluded that the addition on account of reimbursement of expenses was not justified and should be deleted. Conclusion: The Third Member resolved both points of difference in favor of the assessee. The additions under section 68 for the assessment years 2004-05 and 2005-06 were deleted, and the addition on account of reimbursement of expenses to M/s. Cox & King (India) (P.) Ltd. and M/s. Tulip Star Hotels (P.) Ltd. was also deleted. The matter was directed to be placed before the regular Bench for an appropriate order in accordance with the law.
|
