9911796707
TMI Blog2010 (8) TMI 972X X X X Extracts X X X X X X X X Extracts X X X X ..... r the preceding assessment years by the Hon'ble ITAT. 2. The Ld. CIT(A) erred in law and on facts in considering ₹ 2,65,46,255/- as 'Income from other sources' instead of 'Rental Income', while ignoring the lawful explanation of the appellant that the impugned service agreement was a part of the rent agreement only. Thus, the lawful deduction claimed by the appellant should be allowed by following the appellate order for the preceding assessment years by the Hon'ble ITAT. 3. The Ld. CIT(A) erred in law and on facts in disallowing litigation fees of ₹ 20,67,650/- by stating that the same was not incurred wholly and exclusively for the purpose of business, while ignoring the facts and lawful explanation of the appellant that the said litigation expenses were incurred for defending cases filed against the appellant company challenging its operations and, thus, interfering in the functioning of its business. Thus, the litigation expenses were incurred wholly and exclusively for the business purpose of the appellant company and should be allowed fully. 4. The Ld. CIT(A) erred in law and on facts in not disposing of the ground of appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the assessee was entitled to full deduction towards repairs u/s 24 of the LT. Act. The Id. CIT(A) observed as under:- I have considered the facts and circumstances, the reasoning of the AO and the submissions of the assessee. After considering the same 1 am of the opinion that though two agreements had been made for sublicense fee, i.e rent and service charges separately, yet the fact remains that no services of any kind were provided by the appellant to Mitsui Co. To compound the issue, the AO has also failed to bring on record the fact, whether any expenses in respect of the services allegedly provided to Mitsui Co., were claimed by the appellant. In view of the above, I am of the opinion that no services were actually provided by the appellant, and, factually the so-called service charges were nothing but rent received by it. Further, it is settled law, that form and substance of the transaction, and not the nomenclature assigned to it, determine the nature of the income. Accordingly, the appellant is eligible to claim standard deduction u/s 24 of the Act from the same and the disallowance of ₹ 54,39,600/- so made is deleted. Similar orders were pass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve considered the facts and circumstances of the case, the reasoning of the AO and also the submissions of the assessee. After considering the same I see no merit in the contention of the AO that the impugned litigation expenses did not relate wholly and exclusively to the business of the appellant company, but pertained to some personal dispute of the promoters of the appellant company. Merely because the names of the promoters wee also included as claimants in the claim filed before the arbitrator appointed by the Delhi High Court, does not suffice to warrant any inference that the expenditure is attributable to the promoters in their individual capacity. It is abundantly clear from the text of the claim filed by the appellant that all claims pertained to the losses and additional expenses incurred by the appellant company due to delays in arranging or non-arrangement of finance by VLS Finance Ltd. Thus, in no manner there was a question of personal dispute raised in the said arbitration proceedings. Moreover, all these claims were definitely related to the hotel business of the appellant company for which it incurred litigation expenses. Further keeping in view the ratios given ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated certain expenditure on construction of hotel as bogus and disallowed them. The AO had held that certain parties from whom capital goods were claimed to have been purchased did not support the claim of purchases. He further recorded a finding that certain construction was not undertaken as alleged and expenses claimed for such construction were bogus expenses. The depreciation claimed on such construction/expenses was disallowed. This disallowance made in the block assessment u/s 158BC was followed in the regular assessment, though made on a protective basis. The disallowance of depreciation is entirely based on what was held by the AO in the block assessment u/s 158BC of the LT. Act. 19. The assessee impugned above disallowance in appeal before the CIT(A) and explained that disallowance in block assessment was based on certain evidence and statements collected at the back of the assessee without affording opportunity to the assessee to explain them. The Appellate authority in the impugned order found that in earlier proceedings u/s l58BC, CIT (A) had remanded the issue of bogus expenses to the AO to allow opportunity to the assessee to cross-examine the concerned parties. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Tribunal noted that certain material collected by the A.O. was not put to the assessee by the AO. Subsequently, on direction of the appellate authority, the matter was re-examined. The assessee had further produced material to show that cost of construction declared was lower than similar cost shown by other hotels. The Tribunal also noted that cost of construction in the books was supported by valuation carried by DVO. The Tribunal accordingly saw no justification for upholding any disallowance or addition on account of bogus expenses on construction. The order of the ld. CIT(A) on the issue was upheld by the Tribunal. 22. In the light of above order of the Tribunal, we see no justification in sustaining any disallowance of depreciation. As noted earlier, the impugned disallowance as protective is made solely based on similar disallowance and addition made in the block assessment year. No new or fresh material was placed on record to justify addition/disallowance of depreciation in the three years under appeal. The disallowance in block assessment year was deleted by ld. CIT(A) for the reasons already discussed above. The said order has been confirmed by IT AT and disal ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
