DCIT CIR 3(3), MUMBAI v. TULIP HOTELS P.LTD, MUMBAI

ITA 3724/MUM/2012 | 2006-2007
Pronouncement Date: 31-07-2015

Appeal Details

RSA Number 372419914 RSA 2012
Assessee PAN AAACT9446Q
Bench Mumbai
Appeal Number ITA 3724/MUM/2012
Duration Of Justice 3 year(s) 2 month(s) 6 day(s)
Appellant DCIT CIR 3(3), MUMBAI
Respondent TULIP HOTELS P.LTD, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 31-07-2015
Appeal Filed By Department
Bench Allotted E
Tribunal Order Date 31-07-2015
Date Of Final Hearing 08-01-2015
Next Hearing Date 08-01-2015
Assessment Year 2006-2007
Appeal Filed On 25-05-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH MUMBAI . . BEFORE SHRI R.C.SHARMA A M & SHRI SANJAY GARG J M ./ ITA NO . 3 72 4 - 3726 / MUM/20 1 2 ( / ASSESSMENT YEAR S : 200 6 - 07 TO 200 8 - 09 ) DCIT CIR - 3(3) MUMBAI - 20 VS. M/S TULIP HOTELS PVT. LTD. CHANDRAMUKHI (BASEMENT) BEHIND THE OBEROI NARIMAN POINT MUMBAI - 400021 ./ ./ PAN/GIR NO. : A A ACT 9 446 Q ( / APPELLANT ) .. ( / RESPONDENT ) AND ./ ITA NO. 6428 MUM/20 12 ( / ASSESSMENT YEARS :200 9 - 10 ) ACIT CIRCLE - 3(3) MUMBAI VS. M/S TULIP HOTELS PVT. LTD. CHANDRAMUKHI (BASEMENT) BEHIND THE OBEROI NARIMAN POI NT MUMBAI - 400021 ./ ./ PAN/GIR NO. : A A ACT 9446 Q ( / APPELLANT ) .. ( / RESPONDENT ) /REVENUE BY : SHRI NEIL PHILIP /ASSESSEE BY : SHRI VIJAY MEHTA / DATE OF HEARING : 09 /0 7 / 2015 / DATE OF PRONOUNCEMENT 31/07 /2015 / O R D E R PER R.C.SHARMA (A.M) : TH ESE ARE THE APPEAL S FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A MUMBAI FOR THE ASSESSMENT YEAR S 2006 - 07 TO 2009 - 10 IN T HE MATTER OF ORDER PASSED U/S.143(3) OF THE I.T.ACT . ITA NO S . 372 4 - 3726 / 1 2 & ITA NO.6428/12 2 2. THE ISSUES RAISED IN ALL THESE APPEALS ARE SIMILAR THEREFORE ALL THE APPEALS HAVE BEEN HEARD AND ARE BEING DISPOSED OFF BY THIS CONSOLIDATED ORDER. 3. AS THE COMMON ISSUES ARE INVOLVED IN ALL THE A PPEALS THEREFORE FOR THE SAKE OF CONVENIENCE WE TAKE INTO CONSIDERATION THE FACTS AND CIRCUMSTANCES MENTIONED IN THE APPEAL FOR A.Y. 2006 - 07(ITA NO. 3724/MUM/2012) AND THE GROUNDS RAISED IN THIS APPEAL ARE REPRODUCED HEREUNDER : - 1 (A) 'ON THE FACTS AND CI RCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) ERRED IN DELETING THE ADDITION OF RS.3 40 7 5 348/ - MADE BY WAY OF DISALLOWANCE OF INTEREST PAID/PAYABLE TO COX & KINGS (I) LTD. ON THE GROUND THAT IT IS THE BUSINESS EXPENDITURE OF THE ASSESSEE U/S. 37 (1) WITHOUT APPRECIATING THE FACT THAT THE INTEREST PAID/PAYABLE WAS NOT FOR THE PURPOSE OF THE BUSINESS OF THE ASSESSEE AND HENCE NOT ALLOWABLE.' 1 (B) 'WHILE DOING SO THE LD. CIT(A) HAS ERRED IN FOLLOWING THE THIRD MEMBER DECISION OF THE H ON'BLE IT A T GIVEN IN THE ASSESSEE'S OWN CASE FOR A. Y. 2004 - 05 AND 2005 - 06 IN ITA NO. 6490 & 64911MUM/2008 DATED 27.11.2009 WITHOUT APPRECIATING THE FACT THAT THE FACTS OF THE CASE FOR THE YEAR UNDER CONSIDERATION ARE DISTINGUISHABLE FROM THE FACTS PERTAINING TO AY 2004 - 05 & 2005 - 06 AND MOREOVER THE EXPENDITURE CLAIMED ON ACCOUNT OF INTEREST PAID/PAYABLE TO COX & KINGS (I) LTD. WAS DISALLOWED IN THESE YEARS ON THE GROUND THAT THE SAME WAS NOT RELATED TO THE BUSINESS OF THE ASSESSEE.' 2. 'ON THE FACTS AND CIRCUMSTA NCES OF THE CASE AND IN LAW THE LEARNED CIT(A) ERRED IN DELETING THE ADDITION OF RS. 19 05 968/ - MADE BY WAY OF DISALLOWANCE OF OPERATING FEES PAID TO TULIP STAR HOTELS LTD. (TSI - IL) FOLLOWING THE THIRD ME MBER DECISION OF THE HON'BLE IT AT GIVEN IN THE AS SESSEE'S OWN CASE FOR AY 2004 - 05 AND 2005 - 06 IN [TA NOS. 6490 & 64911MUM/2008 DATED 27.11.2009 WITHOUT APPRECIATING THE FACT THAT AS PER THE AGREEMENT THE ASSESSEE HAS ENTERED INTO SAID TRANSACTION WITH TSHL TILL AY 2005 - 06 ONLY AND FROM AY 2006 - 07 THE AS SESSEE DID NOT ENTER INTO AFORESAID TRANSACTION AS THE HOTELIERING BUSINESS OF TS H L HAS BEEN SUSPENDED.' 3(A) 'ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 1 00 118/ - MADE U/S ITA NO S . 372 4 - 3726 / 1 2 & ITA NO.6428/12 3 43B ON ACCO UNT OF DISALLOWANCE OF EMPLOYEES' CONTRIBUTION TO PROVIDENT FUND SINCE THE PAYMENTS WERE MADE AFTER THE DUE DATES HOLDING THAT THE PAYMENTS HAVE BEEN MADE BEFORE FILING OF RETURN WITHOUT APPRECIATING THE FACT THAT IN VIEW OF THE DECISION OF THE HON'BLE I TAT 'C' BENCH KOLKATA IN THE CASE OF BENGAL CHEMICAL AND PHARMACEUTICALS LTD. ( 11 TAXMANN.COM 328) (2011) THE ASSESSEE IS NOT ENTITLED TO DEDUCTION U/S. 36(1)(VA) IN RESPECT OF EMPLOYEES' CONTRIBUTION TO P. F. IF IT IS PAID AFTER THE DUE DATE AS SPECIFIED IN EXPLANATION TO SECTION 36(1)(VA) ON THE BASIS OF PROVISIONS OF SECTION 43B BECAUSE THE SAID S ECTION COMES INTO PLAY ONLY WHEN A DEDUCTION IS OTHERWISE ALLOWABLE UNDER THE ACT. 3(B) 'ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A ) ERRED IN DELETING THE ADDITION MADE U/S. 43B FOLLOWING THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF ALOM EXTRUSION LTD. (319 ITR 306) WITHOUT APPRECIATING THE FACT THAT THE DECISION RELIED UPON IS DISTINGUISHABLE FROM THE FACTS IN THE ASSESS EE'S CASE AS IT RELATES TO SUM PAYABLE AS AN EMPLOYER BY WAY OF ITS CONTRIBUTION TO P.F. WHEREAS THE DISALLOWANCE IS MADE ON ACCOUNT OF EMPLOYEE'S CONTRIBUTION TO P. F.' 4. 'THE APPELLANT PRAYS THAT THE ORDER OF THE CIT (A) ON THE ABOVE GROUND BE SET AS IDE AND THAT OF THE ASSESSING OFFICER BE RESTORED.' 4. AT THE OUTSET LD. AR PLACED ON RECORD ORDER OF TRIBUNAL DATED 27 - 11 - 20109 FOR A.Y. 2004 - 05 & 2005 - 06 IN ASSESSEES OWN CASE WHEREIN ALL THE GROUNDS RAISED BY REVENUE ARE COVERED IN FAVOUR OF ASSESSE E. 5 . RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. FACTS IN BRIEF ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANAGING HOTELS. DURING THE ASSESSMENT PROCEEDINGS THE AO FOUND THAT THE ASSESSEE HAS DEBITED AN AMOUNT OF RS. 3 40 75 348/ - AS I NTEREST EXPENSES ON ACCOUNT OF AMOUNTS PAYABLE BY IT TO M/S COX & KINGS INDIA LTD. THE AO ASKED THE ASSESSEE TO EXPLAIN AS TO WHY THE INTEREST DEBITED ON ACCOUNT OF THE AMOUNTS PAYABLE TO M/S COX & KINGS INDIA LTD. SHOULD NOT BE DISALLOWED. HOWEVER THE A O DID NOT FIND FORCE IN THE SUBMISSION PUT FORTH BY THE ASSESSEE. THE AO FURTHER FOUND THAT THE EXPENSES INCURRED BY THE ASSESSEE WERE NOT RELATED TO THE BUSINESS OF THE ITA NO S . 372 4 - 3726 / 1 2 & ITA NO.6428/12 4 ASSESSEE. ACCORDINGLY THE AO ADDED THE AMOUNT OF RS.3 40 75 348/ - TO THE PROFIT OF TH E BUSINESS OF THE ASSESSEE. 6 . IN APPEAL THE CIT(A) DIRECTED THE AO TO ALLOW SUCH INTEREST EXPENDITURE AS BUSINESS EXPENDITURE TO THE ASSESSEE U/S. 37(!) OF THE ACT AFTER HAVING THE FOLLOWING OBSERVATIONS : - 4.4 I HAVE CONSIDERED THE A.O.'S ORDER AS WELL AS THE APPELLANT'S SUBMISSION. HAVING CONSIDERED BOTH I FIND THAT THE A.O. HAS MADE THE DISALLOWANCE OF INTEREST CLAIMED RS.3 40 75 348/ - ON THE BASIS THAT IN A.Y. - 04 - 05 & 05 - 06 THE A.O. HAS MADE THE DISALLOWANCE OF EXPENSES ITSELF WHICH WAS CLAIMED BY T HE APPELLANT COMPANY ON ACCOUNT OF TRANSACTION WITH COX & KINGS INDIA LTD. ON THE GROUND THAT THE SAME WERE NOT RELATED TO THE BUSINESS OF THE APPELLANT COMPANY. FURTHER TO THAT THE A.O. ALSO TOOK NOTE THAT THE CIT(A) HAS CONFIRMED THE AFORESAID DISALLOWA NCE FOR A.Y. - 04 - 05 & 05 - 06. ACCORDINGLY INTEREST EXPENSES SO CLAIMED BY THE APPELLANT ON SUCH OUTSTANDING BALANCE EXPENSES WHICH WAS DISALLOWED BY THE A.O. IN A.Y. - 04 - 05 & 05 - 06 WAS ALSO NOT ALLOWED IN THE PRESENT ASSESSMENT YEAR ALSO BY THE A.O. ACCORDIN GLY ON THIS PROPOSITION THE A.O. MADE THE DISALLOWANCE OF RS.3 40 75 348/ - AND ADDED BACK TO THE PROFIT OF THE APPELLANT COMPANY AND DISALLOWED THE CLAIM OF DEDUCTION OF INTEREST EXPENSES. 4.5 HOWEVER ON PERUSAL OF THE APPELLANT'S SUBMISSION AND ALSO TA KING NOTE OF THE JURISDICTIONAL ITAT'S DECISION IN THE APPELLANT'S CASE ITSELF I FIND THAT THE ISSUE OF PAYMENT BY THE APPELLANT COMPANY TO CKIL A GROUP CONCERN HAS BEEN DECIDED IN FAVOUR OF THE APPELLANT BY THIRD MEMBER DECISION OF ITA T MUMBAI BY ITA NO.6490 / MUM / 2008 & 6491 / MUM / 2008 DATED 27 / 11 / 09 WHEREIN AS PER PARA - 27 OF THE ORDER THE HON'BIE ITAT HELD THAT THE EXPENSES CLAIMED BY THE APPELLANT COMPANY AS TO BE PAID TO M / S CKIL AFTER OBTAINING THE SAME FROM M/ S TSHL AMOUNTS TO BUSINESS EXPENSES WHI LE HOLDING THIS DECISION THE HON'BLE ITA T THIRD MEMBER OPINED AS UNDER. - '27. I HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF BOTH SIDES AND PERUSED THE MATERIAL PLACED BEFORE ME. THE FACT AS STATED BY THE LEARNED COUNSEL HAS NOT BEEN CONTROVERTED BY THE LEARNED D.R. THE ASSESSEE HAS ENTERED INTO AN AGREEMENT WITH THSL FOR OPERATING THEIR HOTEL TULIP STAR MUMBAI FOR WHICH THE ASSESSEE IS ENTITLED TO OPERATING FEE @ 3% AND REIMBURSEMENT OF ACTUAL EXPENDITURE INCURRED BY IT ON OPERATING THE HOTEL. THE ASSES SEE ENTERED INTO ANOTHER CONTRACT WITH TSHL FOR OPERATING THE HOTEL TULIP STAR MUMBAI BY WHICH TSHL IS TO GET 3% OF THE GROSS HOTEL RECEIPT. THUS WHATEVER THE AMOUNT ASSESSEE IS ENTITLED TO RECEIVE FROM THSL IS TO BE PASSED ON TO TSHL. THE ITA NO S . 372 4 - 3726 / 1 2 & ITA NO.6428/12 5 ASSESSEE ALSO ENTERED INTO AN AGREEMENT WITH CKLL FOR USING THEIR NETWORK OF OFFICE AND INFRASTRUCTURE FOR BRAND AWARENESS AND MARKETING OF TULIP STAR HOTEL FOR WHICH CKLL IS ENTITLED TO REIMBURSEMENT OF EXPENSES ACTUALLY INCURRED BY THEM. CKLL RAISED MONTHLY DEBIT NOT E UPON THE ASSESSEE FOR EXPENDITURE INC URRED BY THEM. IN TURN THE ASSESSEE RAISED DEBIT NOTE OF IDENTICAL AMOUNT UPON THSL. DURING THE WHOLE YEAR CKLL RAISED DEBIT NOTE OF RS. 7 56 16 910 / - AND IN TURN SIMILAR DEBIT NOTE IS RAISED BY THE ASSESSEE. THE AM OUNT R E CEIVED FROM THSL IS PAID TO CKLL. IN ITS PROFIT AND LOSS ACCOUNT THE ASSESSEE HAS NOT CLAIMED ANY DEDUCTION IN RESPECT OF DEBIT NOTE RAISED BY CKLL BECAUSE THE SAME WAS ALREADY REIMBURSED BY THSL. THE ASSESSEE HAS FURNISHED THE PROFIT AND LOSS ACC OUNT IN ITS PAPER BOOK AND FROM THE PERUSAL OF WHICH IT IS EVIDENT THAT THE TOTAL EXPENDITURE DEBITED IN THE PROFIT AND LOSS ACCOUNT WAS ONLY RS. 86 97 337 / - . WHEN THE TOTAL EXPENDITURE INCURRED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDE RATION WAS RS. 86 97 337/ - BY NO STRETCH OF IMAGINATION IT CAN INCLUDE THE EXPENDITURE INCURRED BY CKIL FOR WHICH DEBIT NOTE AMOUNTING TO RS. 7 56 16 910 / - WAS RAISED BY THE ASSESSEE. WHEN THE ASSESSEE HAS NOT CLAIMED THE DEDUCTION ILL RESPECT OF THE E XPENDITURE OF RS. 7 56 16 910 / - THE QUESTION OF DISALLOWING THE SAME IN THE CASE OF THE ASSESSEE CANNOT ARISE. ' 4.6 THUS AS I FIND THAT THE JURISDICTIONAL ITAT HAS DECIDED THE ISSUE IN FAVOUR OF THE APPELLANT HOLDING EXPENSES AS ALLOWABLE BUSINESS DEDUCTION HENCE IN M Y CONSIDERED VIEW THE CLAIM OF INTEREST EXPENSES BY APPELLANT COMPANY ON ACCOUNT OF MAKING PAYMENT OF INTEREST AMOUNT ON SUCH OUTSTANDING BALANCE AS CLAIMED BY THE APPELLANT IN THE ACCOUNTING YEAR IS PERMISSIBLE DEDUCTION AS BUSINESS EXPENSES TO THE APPELL ANT COMPANY. THE A/R OF THE APPELLANT HAS FILED A DETAILED CHART OF INTEREST PAYMENT WHICH CLEARLY SUGGESTS THAT THE APPELLANT HAS MADE DEDUCTION OF TDS WHILE MAKING PAYMENT OF INTEREST AMOUNT ON OUTSTANDING BALANCE TO M / S CKIL U/S 194A OF THE ACT. FURTH ER SUCH DEDUCTION OF TAX ON INTEREST PAYMENT WAS PAID TO GOVERNMENT ACCOUNT AS ON 31103/07. THE APPELLANT'S A / R FILED A COPY OF FORM 16A WHICH CLEARLY DEPICTS THE PAYMENT OF TAX TO GOVERNMENT ACCOUNT. THUS IN MY CONSIDERED VIEW INTEREST EXPENSES WHICH H AVE BEEN CLAIMED AS DEDUCTION BY APPELLANT COMPANY WERE INCURRED IN THE COURSE OF BUSINESS OPERATION. HENCE IN THIS CONTEXT ONCE THE EXPENSES SO INCURRED BY CKIL ON BEHALF OF THE APPELLANT COMPANYS BUSINESS ACTIVITY ONCE HELD BY JURISDICTIONAL ITA T M UMBAI AS BUSINESS EXPENDITURE AND ALSO AS ALLOWABLE DEDUCTION THUS THE INTEREST CHARGE ON SUCH OUTSTANDING BALANCE BY M/S CKIL AND AGREED UPON BY THE APPELLANT COMPANY MUTUALLY IS AS PER ITS MUTUAL BUSINESS EXIGENCIES/DECISION. SUBSEQUENT TO THAT ONCE SU CH INTEREST EXPENSES HAS BEEN PAID BY THE APPELLANT COMPANY TO M / S CKIL THROUGH ACCOUNT PAYEE CHEQUES AND ALSO AFTER MAKING NECESSARY COMPLIANCE UNDER THE INCOME TAX ACT AS ENVISAGED U/S 194A OF THE ACT I CONSIDER IT PROPER AND APPROPRIATE TO DIRECT THE A .O. TO ALLOW ITA NO S . 372 4 - 3726 / 1 2 & ITA NO.6428/12 6 SUCH INTEREST EXPENDITURE AM OUNTING TO RS.3 40 75 348/ - AS BUSINESS EXPENDITURE TO THE APPELLANT U/S 37(1) OF THE ACT KEEPING RELIANCE ON THE JURISDICTIONAL ITAT DECISION OF THIRD MEMBER DATED 27 - 11 - 2009 REFERRED ABOVE IN PARA 4.5 OF THIS ORD ER. THUS THE APPELLANTS THIS GROUND OF APPEAL IS DECIDED IN FAVOUR OF THE APPELLANT. 6 . LD. DR BEFORE US SUBMITTED THAT THE AMOUNTS APPEARING IN THE BOOKS OF THE ASSESSEE THEMSELVES WERE NOT RELATED TO THE BUSINESS OF THE ASSESSEE THEREFORE THE INTER EST CHARGED THEREUPON IS CLEARLY NOT RELATED TO THE BUSINESS OF THE ASSESSEE. IT WAS ALSO THE STAND OF THE REVENUE THAT THE EXPENSES CLAIMED BY THE ASSESSEE ON ACCOUNT OF THE TRANSACTIONS WITH M/S COX & KINGS INDIA LTD. WERE FOUND TO BE NOT RELATED TO THE BUSINESS OF THE ASSESSEE AND WERE DISALLOWED IN THE EARLIER ASSESSMENT YEARS 2004 - 05 AND 2005 - 06 AND THE SAME WAS CONFIRMED BY THE CIT(A) WHILE DECIDING THE APPEALS FILED BY THE ASSESSEE IN RESPECT OF AFOREMENTIONED ASSESSMENT YEARS. THEREFORE THERE IS NO WAY TO ALLOW THE BUSINESS EXPENDITURE OF THE ASSESSEE U/S.37(1) OF THE ACT. 7 . LD. AR ON THE OTHER HAND CONTESTED THE PLEA OF THE LD. DR AND DREW OUR ATTENTION TO THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2004 - 05 & 2005 - 06 PASSED IN ITA NO.6490&6491/MUM/2008 DATED 27 - 11 - 2009 WHICH HAS ALSO BEEN RELIED BY THE CIT(A) HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE THEREFORE THE FINDING OF THE CIT(A) IN THIS REGARD IS JUST AND PROPER. 8 . ON CONSIDERATION OF THE SUBMISSIO NS MADE BY BOTH THE PARTIES WE FOUND THAT THE ISSUE PERTAINING TO INTEREST PAYABLE TO M/S COX & KINGS (I) LTD. IS ALREADY DECIDED BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ITA NO S . 372 4 - 3726 / 1 2 & ITA NO.6428/12 7 AYS. 2004 - 05 & 2005 - 06 WHEREIN THE TRIBUNAL OBSERVED THAT THE ASSESSEE IN IT S PROFIT AND LOSS ACCOUNT HAD NOT CLAIMED ANY DEDUCTION IN RESPECT OF DEBIT NOTE RAISED BY CKIL BECAUSE THE SAME WAS ALREADY REIMBURSED BY THSL. THE TRIBUNAL FURTHER OBSERVED THAT WHEN THE ASSESSEE HAS NOT CLAIMED THE DEDUCTION IN RESPECT OF THE EXPENDITU RE THE QUESTION OF DISALLOWING THE SAME IN THE CASE OF ASSESSEE CANNOT ARISE. RELYING THE AFORESAID DECISION OF THE TRIBUNAL THE CIT(A) DELETED THE ADDITION SO MADE BY THE AO. WE FURTHER FOUND THAT ONCE SUCH INTEREST EXPENSES HAS BEEN PAID BY THE ASSESS EE COMPANY TO M/S CKIL THROUGH ACCOUNT PAYEE CHEQUES AND ALSO AFTER MAKING NECESSARY COMPLIANCE UNDER THE INCOME TAX ACT AS ENVISAGED U/S 194A OF THE ACT WE ARE IN THE OPINION THAT IT WILL BE FUTILE EXERCISE TO INTERFERE IN THE FINDINGS OF THE CIT(A). ACC ORDINGLY WE UPHELD THE FINDING S OF THE CIT(A) IN THIS REGARD FOR ALL THE ASSESSMENT YEARS UNDER CONSIDERATION. 9 . COMING TO THE NEXT GROUND THE REVENUE IS AGGRIEVED BY THE DISALLOWANCE OF OPERATING FEES PAID TO TULIP STAR HOTELS LTD. (TSHL) . 10 . THE A O DISALLOWED THE OPERATING FEES ON THE BASIS THAT THE SAME WERE CONSIDERED AS BOGUS EXPENSES IN THE AY 2004 - 05 & 2005 - 06 AND ACCORDINGLY DISALLOWED IN THOSE YEARS AND THE SAME WERE ALSO CONFIRMED BY THE CIT(A). 1 1 . BY THE IMPUGNED ORDER THE CIT(A) DELETED THE ADDITION BY FOLLOWING THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 2004 - 05 & 2005 - 06 AFTER HAVING THE FOLLOWING OBSERVATIONS : - ITA NO S . 372 4 - 3726 / 1 2 & ITA NO.6428/12 8 5.3 I HAVE CONSIDERED THE A.O.'S ORDER AS WELL AS THE APPELLANT'S SUBMISSION. HAVING CONSIDE RED BOTH I FIND THAT THE ISSUE RAISED THROUGH THIS GROUND OF APPEAL IS COVERED BY THE JURISDICTIONAL ITAT DECISION BY THIRD MEMBER BY ITA NO.6490 / MUM/2008 & 6491IMUML2008 DATED 27/11 / 09 WHEREIN THE ISSUE IS ALSO DECIDED IN FAVOUR OF THE APPELLANT. FOR TH E SAKE OF CLARITY THE RELEVANT . PORTION OF THE ITA T'S ORDER IS EXTRACTED AS UNDER: - ' .. 29. FROM THE ABOVE DETAILS OF THE EXPENDITURE IT IS EVIDENT THAT THE ASSESSEE HAS NOT CLAIMED ANY DEDUCTION IN RESPECT OF OPERATING FEES PAID BY IT TO TSHL. WHEN NO DEDUCTION IS CLAIMED THE QUESTION OF DISALLOWING THE SAME DOES NOT ARISE. BEFORE I PART WITH THE MATTER I MAY CLARIFY THAT THE EXPENDITURE WAS ACTUALLY INCURRED BY TSHL AND WHETHER SUCH EXPENDITURE IS ALLOWABLE OR NOT IS TO BE EXAMINED IN THE CASE OF THSL. SO FAR AS THE ASSESSEE'S CASE IS CONCERNED IN MY OPINION WHEN NO DEDUCTION WAS CLAIMED THE QUESTION OF ANY DISALLOWANCE DOES NOT ARISE. SIMILAR IS THE FACT IN ASSESSMENT YEAR 2005 - 06 EXCEPT VARIATION IN THE AMOUNT. THEREFORE MY FINDINGS FOR THE ASSESSMENT YEAR 2004 - 05 WOULD BE SQUARELY APPLICABLE TO ASSESSMENT YEAR 2005 - 06. ACCORDINGLY I ANSWER THE QUESTION NO.2 ALSO IN FAVOUR OF THE ASSESSEE AND HOLD THAT THE ADDITION MADE AND CONFIRMED BY THE CJT(A) ON ACCOUNT OF REIMBURSEMENT OF EXPENSES TO M/ S COX & KINGS (INDIA) PVT. LTD. AND TO M/ S TULIP STAR HOTELS PVT. LTD. FOR THE ASSESSMENT YEAR 2004 - 05 AND 2005 - 06 ARE LIABLE TO BE DELETED. 5.4 TAKING NOTE OF THE AFORESAID DECISION OF HON'BLE ITAT MUMBAI THIS GROUND OF APPEAL IS DECIDED IN FAVOUR OF T HE APPELLANT. ACCORDINGLY THIS GROUND OF APPEAL IS ALLOWED. 1 2 . IN THIS REGARD LD. DR SUBMITTED THAT THERE IS NO MENTION OF ANY SPECIFIC PROPERTY THAT IS TO BE ASSIGNED DELEGATED OR MANAGED BY THE TSHL IN THE MOU AND THERE IS EVEN NO STIPULATION FOR T HE PAYMENT OF ANY FEES IN THE AGREEMENT. MOREOVER THE ASSESSEE HAS NOT EVEN DEDUCTED TDS ON THE PAYMENTS MADE TO M/S TULIP STAR HOTELS LTD. IT IS EVIDENT THAT THE MOU WITH TSHL IS INDEPENDENT OF THE ASSESSEES AGREEMENT WITH THSL HENCE THE QUESTION OF R EIMBURSEMENT DOES NOT ARISE. THEREFORE THE SAME WAS RIGHTLY DISALLOWED BY THE AO AS BOGUS EXPENSES. ITA NO S . 372 4 - 3726 / 1 2 & ITA NO.6428/12 9 1 3 . IN REPLY TO THE SAME LD. A R SUBMITTED BEFORE US THAT THE DISALLOWANCE WAS MADE BY THE AO ON THE PLEA THAT SIMILAR OPERATIONAL FEES PAID DURING THE AS SESSMENT YEAR 2004 - 05 AND 2005 - 06 WERE ALSO DISALLOWED CANNOT BE TAKEN INTO ACCOUNT IN VIEW OF THE FACT THAT THE SAID DISALLOWANCE IN THE CASE FOR THE SAID ASSESSMENT YEARS HAS BEEN DELETED BY TRIBUNAL VIDE ORDER DATED 27 - 11 - 2009 . THEREFORE NO INTERFERENC E IS REQUIRED IN THE FINDINGS OF THE CIT(A) . 1 4 . WE HAVE CONSIDERED RIVAL CONTENTIONS PERUSED THE RECORD CAREFULLY AND ALSO GONE THROUGH THE ORDER PASSED BY THE THIRD MEMBER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE A.Y. 2004 - 05 & 2005 - 06 . WE FOUND TH AT THE CIT(A) DELETED THE DISALLOWANCE AFTER RELYING ON THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE . SIMILAR IS THE FACT IN THE INSTANT CASE EXCEPT VARIATION IN THE AMOUNT. RESPECTFULLY FOLLOWING THE ORDER OF TRIBUNAL WE UPHELD THE FINDINGS OF THE CIT(A) IN THIS REGARD. 1 5 . THE REVENUE IS ALSO AGGRIEVED FOR DISALLOWANCE OF EMPLOYEES CONTRIBUTION TO PROVIDENT FUND U/S. 43B OF THE ACT. 16 . THE AO HAS DISALLOWED THE EPF PAYMENT ON THE PLEA THAT THE SAME HAS NOT BEEN PAID WITHIN THE DUE DATE AND THE SAME HAS BEEN PAID WITHIN THE GRACE PERIOD. 17 . THE CIT(A) BY THE IMPUGNED ORDER FOLLOWING THE DECISION OF HON BLE DELHI HIGH COURT IN THE CASE OF AIMIL LTD. 321 ITR 508 AND THE DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF VINAY CEMENT LTD. 213 CTR 268 AS WELL AS ALOM EXTRUSION LTD. 319 ITR 306 DELETED THE ADDITION AFTER HAVING FOLLOWING OBSERVATIONS : - ITA NO S . 372 4 - 3726 / 1 2 & ITA NO.6428/12 10 6.3 I HAVE TAKEN NOTE OF THE AOS ORDER AS WELL AS APPELLANT ARS SUBMISSION. I HAVE ALSO TAKEN NOTE OF RECENT JUDGMENT OF APEX COURT IN THE CAS E OF ALOM EXTRUSIONS LTD. VS. CIT REPORTED IN 319 ITR 306 WHEREIN IT HAS BEEN CLEARLY HELD THAT THE PAYMENTS EVEN MADE BEFORE FILING OF RETURN OF INCOME IS ALLOWABLE EXPENDITURE. IN VIEW OF THE SAME I AM OF THE CONSIDERED VIEW THAT THE AO WAS NOT JUSTIF IED IN HIS ACTION. ACCORDINGLY I CONSIDER IT PROPER AND APPROPRIATE TO DELETE THE ADDITION SO MADE BY THE AO. APPELLANTS THIS GROUND OF APPEAL IS ALLOWED. 1 8 . WE HAVE CONSIDERED RIVAL CONTENTIONS . T HE ISSUE UNDER CONSIDERATION IS SQUARELY COVERED BY TH E JUDGMENT OF HON BLE SUPREME COURT IN THE CASE OF ALOM EXTRUSIONS LTD. 319 ITR 306 WHEREIN IT HAS VIVIDLY BEEN HELD THAT THE PAYMENTS EVEN MADE BEFORE FILING OF RETURN OF INCOME IS ALLOWABLE EXPENDITURE. ACCORDINGLY WE HAVE NO OPTION BUT TO UPHOLD THE FINDINGS OF THE CIT(A) IN THIS REGARD. 1 9 . FOLLOWING THE REASONING GIVEN ABOVE IN A.Y. 2006 - 07 THE APPEALS FILED BY REVENUE FOR A.Y. 2007 - 08 2008 - 09 & 2009 - 2010 ARE DISMISSED. IT IS PERTINENT TO MENTION HERE THAT GROUND NO.2 IN A.Y.2007 - 08 IS CONSEQUENTIAL TO GROUND NO. 1 OF A.Y.2006 - 07. FURTHER THE CIT(A) HAS HELD THAT EXPENSES DISALLOWED BY ASSESSEE COMPANY U/S. 40(A ) (IA) OF THE ACT IN A.Y.2006 - 07 SHOULD BE ALLOWED IN A.Y. 2007 - 08 ON PAYMENT BASIS. 20. IN THE RESULT APPEALS OF THE REVENUE ARE DISMISSED . O RD ER PRONOUNCED IN THE OPEN COURT ON THIS 31/07 / 201 5 . SD/ - SD/ - ( ) ( SANJAY GARG ) ( . . ) ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 31/07 /201 5 . . /PKM . / PS ITA NO S . 372 4 - 3726 / 1 2 & ITA NO.6428/12 11 / COPY OF THE ORDER FORWARDED TO : / BY ORDER / ( ASSTT. REGISTRAR) / ITAT MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) MUMBAI. 4. / CIT 5. / DR ITAT MUMB AI 6. / GUARD FILE. //TRUE COPY//