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TMI Blog2013 (10) TMI 644X X X X Extracts X X X X X X X X Extracts X X X X ..... to tax under the head "income from house property" while the compensation received for other assets and licences is chargeable to tax under the head "income from other sources" - As there is no such bifurcation of compensation indicated in the relevant conducting agreement, we direct the assessee to make such bifurcation on some reasonable basis and the A.O. is directed to verify the same and bring to tax the compensation attributable to the use of building premises under the head "income from house property" and for use of other assets and licences under the head "income from other sources". Disallowance of Expenses – Held that:- Since it is already held that the receipts under the conducting agreement did not constitute business inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of Rs. 7,59,300/- after claiming certain expenses. During the course of assessment proceedings, the A.O. examined the conducting agreement entered into between the assessee and Rajendra Saigal and found on such examination certain clauses as extracted below to be important:- "i) The assessee was proprietor of M/s Khana Khazana and was a hotelier by business and the hotel business was carried on in the name and style of M/s Khana Khazana. ii) The assessee has the Bombay Shop and Establishment license, Eating House license, Police license and Grade-I license. The hotel business is in running condition with all the fixtures, furnitures and articles, utensils, equipments, decorations, etc. iii) The conductors i.e. Mrs. Rajinder Saigal a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... licenses and permits that may be required by any rule, ordinance or law. The conductor at her own cost and expenses will replace with articles of same brand and quality such part of the equipments, utensils and fixtures and furnitures as may be destroyed, endured or damaged. viii) The conductor shall employ such person or persons for running the said hotel and pay the remuneration without any responsibility to the assessee. ix) The conductor shall be solely responsible for the care or safe keeping of any of the goods, refreshment, equipments, utensils and fixtures kept, placed or used in the hotel premises whether such item belongs to owner or assessee. x) The conductor shah pay all the expenses, charges, outgoings, debts and liabilit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come from other sources" u/s 56 of the Act. He also held that out of the various expenses claimed by the assessee, only the expenses which were covered by the provisions of section 57(ii) and 57(iii) of the Act were allowable as deduction. Accordingly, after allowing such expenses quantified by him at Rs. 5,05,803/- from the total receipt of Rs. 16,90,205/- received by the assessee under the conducting agreement, the balance amount of Rs. 11,84,402/- was brought to tax by him in the hands of the assessee under the head "income from other sources" thereby disallowing the expenses of Rs. 4,25,102/- claimed by the assessee. 5. Against the order of the A.O., the assessee preferred an appeal before the ld. CIT(A) challenging the action of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee and even the restaurant was being run by the conductor in the name of the assessee. 7. The ld. D.R., on the other hand, strongly relied on the orders of the authorities below in support of the Revenue's case on this issue. He submitted that there was no business risk attributable to the assessee as per the relevant conducting agreement as clearly made out by the A.O. and since the assessee was entitled to receive the fixed minimum compensation for the use of her licenses and other assets, the said compensation is chargeable to tax in her hands under the head "income from other sources" as rightly held by the authorities below. 8. We have considered the rival submissions and also perused the relevant material available o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 relating to the disallowance of expenses of Rs. 4,25,102/- made by the A.O. and confirmed by the ld. CIT(A), it is observed that the said disallowance was made as a result of denial of the claim of the assessee that the receipts under conducting agreement were chargeable to tax as her business income. Since we have upheld the decision of the authorities below holding that the receipts under the conducting agreement did not constitute business income of the assessee, the consequential disallowance on account of expenses made by the A.O. is liable to be confirmed. Accordingly, we confirm the said disallowance and dismiss ground No. 5 of the assessee's appeal. 10. In the result, appeal of the assessee is partly allowed. Order pronounced ..... X X X X Extracts X X X X X X X X Extracts X X X X
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