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TMI Blog2015 (9) TMI 1347X X X X Extracts X X X X X X X X Extracts X X X X ..... 1-8-2015 - SHRI G.S.PANNU AND SHRI AMIT SHUKLA, JJ. For The Revenue : Shri Akhilendra Yadav For The Assessee : S/Shri R.C.Jain/ Arun Verma ORDER PER G.S.PANNU, A.M: The captioned cross-appeals by the Revenue and the assessee are directed against the order of the CIT(A) dated 29/07/2013, which in turn, has arisen from an assessment order dated 28/11/2011 passed by the Assessing Officer u/s.143(3) of the Income Tax Act, 1961 (in short the Act ) pertaining to assessment year 2009-10. 2. The assessee before us is a company incorporated under the provisions of Companies Act, 1956 and is, inter-alia, engaged in the business of hotel and restaurants and activities incidental thereto, financing activities and wind power generation and sales. In the course of assessment proceedings, the substantive dispute raised by the Assessing Officer was with regard to the amount received by the assessee from Kamat Hotels (I) Ltd. on account of Management fee (Royalty). The Assessing Officer treated such income as income assessable under the head Income from house property whereas the assessee had returned the said income as business income . The stand of the Assessing O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me was accepted. The assessment was completed under Section 143(3). Up to assessment year 2005- 06, the assessment has been completed by the AO and the contention of the assessee that the revenue received from KHIL are business asset, were accepted. For assessment year 2005-06 2003-04 the assessment was completed under Section 143(3). The matter reached to the stage of the Tribunal, however, this issue was never disputed by the AO that the revenue receipt received from M/s. KHIL under the agreement are business receipt as they were accepted. Therefore, it cannot be said that any character of the revenue receipt has been changed in the year under consideration. In our considered view, the principle of consistency in the case in hand is applicable. Accordingly, the AO should have accepted the receipt under the head business income shown by the assessee. 4. Subsequently, in assessment years 2007-08 and 2008-09 also, the Tribunal in its common order in cross-appeals of the assessee and the Revenue vide ITA Nos. 3191/Mum/2012 and 3192/Mum/2012 dated 25/7/2014 followed its earlier decision for A.Y 2006-07(supra) and held that the Management fee (Royalty) received by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee. Therefore, as rightly pointed out by Ld. DR, the instant Grounds raised by the Department do not survive, following our decision in the appeal of the assessee. Thus, the Grounds of appeal Nos. 1 to 3 in the appeal of the Revenue are dismissed. 6. Now, the only issue remaining in the appeal of the assessee as well as the cross-appeal of the Revenue, relates to the disallowance made by the Assessing Officer by applying section 14A of the Act amounting to ₹ 71,07,580/-. 6.1 In the Memo of appeal, initially the assessee raised the following Grounds of appeal on this aspect:- 2. DISALLOWANCE U/S.14A : i) On the facts and in circumstances of the case and in law, the Id. CIT(A) erred in confirming the double disallowance of ₹ 1,49,74,559/- already disallowed by the appellant u/s 36(1)(iii), and again considered for working of interest expenditure under Rule 8D(2)(ii). The Ld. CIT(A) has not given any reason for double disallowance of interest. ii) The appellant submits that the appellant's claim against double disallowance out of interest is confirmed in the order dated 9-04-2012 by the Id. CIT(A) -17 in the case of the associate of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the circumstances of the case and in law, the CIT(A) was not justified in giving a finding that investment in partnership firm was not exempt from tax and hence not includible for the purpose of disallowance under Rule 8D read with Section 14A of the Act without appreciating that the share income from the partnership firm is exempt from tax u/s.10(2A) of the Act and consequently, provisions of Section 14A have to be applied in respect of any expenditure incurred by the assessee in relation to such income. 6) On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in directing the Assessing Officer to exclude investment in partnership firm for the purpose of disallowance U/S 14A read with Rule 8D holding that investment in partnership firm is not tax exempt, without appreciating that income from partnership firm is exempt U/S 10(2A) of the Act and therefore, for the purpose of disallowance under Section 14A read with Rule 8D, the Assessing Officer was justified in including investment in the partnership firm as part of investment which is capable of generating exempt income, which view has been upheld by the Special Bench of ITAT, Ahmedabad ..... 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