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TMI Blog2021 (10) TMI 510X X X X Extracts X X X X X X X X Extracts X X X X ..... cation in any one year shall apply to the other year also. 1.2 The erstwhile assessee namely M/s Virtuous Shopping Centre Ltd. is stated to have merged with M/s Trent Hypermarket Private Limited and accordingly, the assessee has filed revised Form No.36 reflecting aforesaid changes. Finding the same in order, we proceed with adjudication of the appeals. 1.3 The assessee's appeal for AY 2012-13 arises out of the order of learned Commissioner of Income-Tax (Appeals)-3, Mumbai [CIT(A)] dated 16/08/2016 in the matter of assessment framed by Ld. Assessing Officer (AO) u/s 143(3) of the Act on 30/03/2015. The grounds raised by the assessee read as under: - 1) Assessing business receipt under income from other sources as against Profits & gain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rial on record. We have also deliberated upon various judicial pronouncements as cited during the course of hearing. Our adjudication to the subject matter of appeal would be as given in succeeding paragraphs. Assessment Proceedings 2.1 The material facts are that the erstwhile assessee M/s Virtuous Shopping Centre Ltd., as noted by Ld. AO, was stated to be engaged in retail business of lifestyle products, grocery, fruits & vegetables, apparels, books, music, household appliances & other merchandises. The assessee had 100% subsidiary namely M/s Commonwealth Developers Private Ltd. (CDPL). During the year, the assessee received development management fees from CDPL and offered the same as business income. It also earned interest on loans g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee company. The employee details, note on selection criteria of Mr. Peter Young who was stated to have carried out the services on behalf of the assessee, his work experience and prior working details, copy of appointment letter and job agreement with salary details etc. was also furnished as demanded by Ld. AO. Mr. Peter Young was stated to be key person who undertook / executed the job on behalf of the assessee. 2.3 The attention was drawn to assessee's main object as mentioned in the Memorandum of Association. The main object would, inter-alia, include to carry on the business of developing real estate for the purpose of commercial, industrial or residential use and other immovable properties and act as realtors, builders, contracto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t provide any specifics services provided or the objects achieved. The reply of the assessee as well as M/s CDPL did not provide any specific details of the services rendered. The perusal of financial statements of M/s CDPL revealed that there was hardly any addition to the project except payment of development management fees and interest on loan as payable to the assessee. Various deficiencies were also noted in the invoices issued by the vendor. Therefore, it was concluded that the fess did not have the characteristics of business transactions and could not be considered as business receipts. Since the assessee could not show correlation of expenses for earning of such income, the same would not be allowable deduction against the same ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ho became 100% subsidiary of the assessee. M/s CDPL was engaged in developing a mall i.e. Pride Mall at Pune. For the same, the assessee was appointed for providing development management services w.e.f. 01/09/2011 in respect of the said project and an agreement was entered into with CDPL (page nos. 99 to 102 of Paper Book). To render the services, the assessee had employed Mr. Peter Young who was stated to have expertise in managing development of malls and commercial complexes. The same is evident from the agreement between the assessee and Mr. Peter Young which enumerates the period of agreement, scope of work, working conditions and compensation package etc. (Page nos. 91 to 98 of the Paper Book). The selection criteria of Mr. Peter You ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e would be allowable business expenditure. Ground No.2 of the appeal stand allowed. 4.3 In ground no.3, the assessee is aggrieved by disallowance of various business expenditure as claimed in the Profit & Loss Account. Since, we have held the management fees and interest income as Business income and negated the stand of lower authorities that there was no business activity, these expenditure would be allowable as business expenses. The Ld. AO is directed to verify the same and allow deduction thereof. Ground No.3 stand allowed for statistical purposes. 4.4 The appeal stand allowed in terms of our above order. Cross-Appeals for AY 2013-14 5. Facts as well as issues are substantially the same in this year. While framing assessment u/s 14 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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