DCIT, New Delhi v. M/s. Ambience Hotels & Resorts Pvt. Ltd., New Delhi

ITA 6421/DEL/2015 | 2011-2012
Pronouncement Date: 20-11-2017 | Result: Dismissed

Appeal Details

RSA Number 642120114 RSA 2015
Assessee PAN AADCA7906K
Bench Delhi
Appeal Number ITA 6421/DEL/2015
Duration Of Justice 1 year(s) 11 month(s) 17 day(s)
Appellant DCIT, New Delhi
Respondent M/s. Ambience Hotels & Resorts Pvt. Ltd., New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 20-11-2017
Appeal Filed By Department
Tags No record found
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 20-11-2017
Assessment Year 2011-2012
Appeal Filed On 03-12-2015
Judgment Text
PAGE | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A : NEW DELHI BEFORE SHRI H.S.SIDHU JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI ACCOUNTANT MEMBER ITA NO. 6420 6421 AND 6422 /DEL/2015 & ITA NO. 6873/DEL/2014 (ASSESSMENT YEAR: 2009 - 10 TO 2012 - 13 ) DCIT CENTRAL CIRCLE - 20 NEW DELHI VS. AMBIENCE HOTELS & RESORTS PVT. LTD L - 4 GREEN PARK EXTN NEW DELHI PAN:AADCA7906K (APPELLANT) (RESPONDENT) ITA NO. 6872/DEL/2014 AND 6415/DEL/2015 (ASSESSMENT YEAR: 2010 - 11 AND 2012 - 13) DCIT CENTRAL CIRCLE - 20 NEW DELHI VS. AMBIENCE DEVELOPERS AND INFRASTRUCTURE PVT. LTD L - 4 GREEN PARK EXTN NEW DELHI PAN:AAECA6894P (APPELLANT) (RESPONDENT) CO NO. 377/DEL/2015 (IN ITA NO. 6872/DEL/2014) (ASSESSMENT YEAR: 2010 - 11) AMBIENCE DEVELOPERS AND INFRASTRUCTURE PVT. LTD L - 4 GREEN PARK EXTN NEW DELHI PAN:AAECA6894P VS. DCIT CENTRAL CIRCLE - 20 NEW DELHI (APPELLANT) (RESPONDENT) REVENUE BY : MS. APARNA KARAN CIT DR ASSESSEE BY: SHRI TR TALWAR ADV DATE OF HEARING 14/11/ 2017 DATE OF PRONOUNCEMENT 2 0 / 11 /2017 DCIT VS. AMBIENCE HOTELS & RESORTS PVT. LTD ITA NO. 6420 6421 6422/DEL/2015 & ITA NO. 6873/DEL/2014 872/DEL/2014 6415/DEL/2015 (ASSESSMENT YEAR: 2009 - 10 TO 2012 - 13) PAGE | 2 O R D E R PER PRASHANT MAHARISHI A. M. 1. THESE ARE THE APPEALS FOR AY 2009 - 10 2010 - 11 2011 - 12 AND 2012 - 13 FILED BY REVENUE WHERE THE RESPONDENT IS M/S AMBIENCE HOTEL & RESORTS PRIVATE LIMITED ( IN SHORT AHRPL) . 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL IN ITA NO. 6420/DEL/2015 WHERE AHRPL IS RESPONDENT FOR THE ASSESSMENT YEAR 2009 - 10 WHEREIN THE LD ASSESSING OFFICER HAS MADE ADDITION OF RS. 76190927/ - IN THE HANDS OF THE ASSESSEE UNDER THE HEAD INCOME FROM HOUSE PROPERTY AND THE LD CIT(A) VIDE ORDER DATED 14.09.2015 HAS HELD THAT SUCH INCOME FROM HOUSE PROPERTY ARISING OUT OF LEASIN G OF RETAILS SPACE BELONGING TO THE ASSESSEE IS CHARGEABLE TO TAX IN THE HANDS OF ANOTHER COMPANY AMBIENCE DEVELOPMENT AND INFRASTRUCTURE PVT. LTD BY VIRTUE OF AGREEMENT DATED 31.03.2008: - 1. THAT THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS. 7 61 90 927/ - (AFTER GIVING 30% DEDUCTION ON ACCOUNT OF HOUSE PROPERTY INCOME) MADE ON ACCOUNT OF LEASE RENTAL INCOME WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE IS THE LEGAL OWNER OF THE PROPERTY IN LINE WITH SECTION 60 OF THE INCOME T AX ACT 1961. 2. THAT THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION AND IGNORING THE FACT THAT HER PREDECESSOR LTD. CIT(A) HAS CONFIRMED THE ADDITION ON THE SAME GROUND. 3. (A) THE ORDER OF THE CIT (A) IS ERRONEOUS AND NOT TENABLE IN LA W AND ON FACTS. 3. ON IDENTICAL FACTS AND CIRCUMSTANCES THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL IN ITA NO. 6873/DEL/2014 F OR THE ASSESSMENT YEAR 2010 - 11 : - 1. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITION OF RS. 10 13 30 442/ - MADE BY A.O. ON PROTECTIVE BASIS IN THE CASE OF M/S AMBIENCE DCIT VS. AMBIENCE HOTELS & RESORTS PVT. LTD ITA NO. 6420 6421 6422/DEL/2015 & ITA NO. 6873/DEL/2014 872/DEL/2014 6415/DEL/2015 (ASSESSMENT YEAR: 2009 - 10 TO 2012 - 13) PAGE | 3 DEVELOPERS AND INFRASTRUCTURES PVT. LTD. AND THE MATTER IS INTERLINKED WITH THE ASSESSEE. 2. (A) THE ORDER OF THE CIT (A) IS ERRONEOUS AND NOT TENA BLE IN LAW AND ON FACTS. 4. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL IN ITA NO. 642 1 /DEL/2015 FOR THE ASSESSMENT YEAR 2011 - 12 ON IDENTICAL FACTS AN D CIRCUMSTANCES : - 1. THAT THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.8 52 67 106/ - (AFTER GIVING 30% DEDUCTION ON ACCOUNT OF HOUSE PROPERTY INCOME) MADE ON ACCOUNT OF LEASE RENTAL INCOME WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE IS THE LEGAL OWNER OF THE PROPERTY IN LINE WITH SECTION 60 OF THE INCOME TAX ACT 1961. 2. THAT THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION AND IGNORING THE FACT THAT HER PREDECESSOR LTD. CIT(A) HAS CONFIRMED THE ADDITION ON THE SAME GROUND. 3. THAT THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN RESTRICTING THE ADDITION TO RS. 17 317/ - OUT OF RS.36 86 230/ - MADE U/S 14A OF THE INCOME TAX ACT 1961 R/W RULE 8D OF THE INCOME TAX RULES 1962 BY IGNORING THE FACTS AND CIRCUMSTANCE OF THE CASE. 4. (A) THE ORDER OF THE CIT(A) IS ERRONEOUS AND NOT TENABLE IN LAW AND ON FACTS. 5. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL IN ITA NO. 6422/DEL/2015 FOR THE ASSESSMENT YEAR 2012 - 13 ON IDENTICAL FACTS AND CIRCUMSTANCES : - 1. THAT THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.8 64 34 218/ - (AFTER GI VING 30% DEDUCTION ON ACCOUNT OF HOUSE PROPERTY INCOME) MADE ON ACCOUNT OF LEASE RENTAL INCOME WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE IS THE LEGAL OWNER OF THE PROPERTY IN LINE WITH SECTION 60 OF THE INCOME TAX ACT 1961. 2. THAT THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION AND IGNORING THE FACT THAT HER PREDECESSOR LTD. CIT(A) HAS CONFIRMED THE ADDITION ON THE SAME GROUND. DCIT VS. AMBIENCE HOTELS & RESORTS PVT. LTD ITA NO. 6420 6421 6422/DEL/2015 & ITA NO. 6873/DEL/2014 872/DEL/2014 6415/DEL/2015 (ASSESSMENT YEAR: 2009 - 10 TO 2012 - 13) PAGE | 4 3. THAT THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.62 85 102/ - MADE U/S 14 A OF THE INCOME TAX ACT 1961 R/W RULE 8D OF THE INCOME TAX RULES 1962 BY IGNORING THE FACTS AND CIRCUMSTANCE OF THE CASE. 4. (A) THE ORDER OF THE CIT (A) IS ERRONEOUS AND NOT TENABLE IN LAW AND ON FACTS. 6. IN CASE OF AMBIENCE DEVELOPERS AND INFRASTRUCTUR E PVT. LTD ( IN SHORT ADIPL) THE REVENUE HAS FILED APPEAL FOR ASSESSMENT YEAR 2010 - 11 AGAINST THE ORDER OF THE LD CIT(A) WHEREIN AN ADDITION OF RS. 101330442/ - INCLUDED IN THE TOTAL INCOME OF THE ASSESSEE ON PROTECTIVE BASIS UNDER THE HEAD INCOME FROM HO USE PROPERTY MADE BY THE AO WAS DELETED. THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL IN ITA NO. 6872/DEL/2014 FOR THE ASSESSMENT YEAR 2010 - 11 : - 1. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE A DDITION OF RS. 10 13 30 442/ - MADE BY A.O. ON ACCOUNT OF LEASE RENTAL ON PROTECTIVE BASIS. 2. (A) THE ORDER OF THE CIT (A) IS ERRONEOUS AND NOT TENABLE IN LAW AND ON FACTS. 7. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL IN CO. NO. 377/DEL/2015 IN THE ITA NO. 6872/DEL/2014 FOR THE ASSESSMENT YEAR 2010 - 11: - 1. IN NOT ACCEPTING THE LEASE RENTALS RECEIVED FROM RETAIL SPACES OF AMBIENCE HOTELS AND RESORTS PVT. LTD. (AHRL) AND OFFERED FOR TAXATION IN ITS HANDS UNDER AN AGREEMENT IN LIEU OF INTEREST F REE DEPOSIT OF RS. 75 CRORES GIVEN TO AHRL AND TREATING THE SAME INCOME IN THE HANDS OF AHRL. 2. IN NOT ACCEPTING THE CONCEPT OF BENEFICIAL OWNERSHIP OF THE PROPERTY IN POSSESSION AND ENJOYMENT AS HELD BY THE APEX COURT IN CIT V. PODAR CEMENT PVT. LTD. (19 97) 226 ITR 625 (SC) AND JODHA MAI KUTHIALA (RB) V. CIT (1971) 82 ITR 570 (SC). DCIT VS. AMBIENCE HOTELS & RESORTS PVT. LTD ITA NO. 6420 6421 6422/DEL/2015 & ITA NO. 6873/DEL/2014 872/DEL/2014 6415/DEL/2015 (ASSESSMENT YEAR: 2009 - 10 TO 2012 - 13) PAGE | 5 3. IN NOT RECOGNIZING THAT SECTION 60 IS NOT ACCEPTABLE IF THE INCOME IS DERIVED NOT FROM TRANSFER OF ASSETS BUT BY REASON OF THE RIGHT TO MANAGE AND CARRY ON BUSINESS. 4. IN IGNORING THE FACT THAT THE APPELLANT COMPANY HAD ACQUIRED AN OVERRIDING TITLE OVER THE INCOME FROM LEASING OF RETAIL SPACES OF AHRL UNDER AN AGREEMENT IN LIEU OF THE INTEREST FREE DEPOSIT OF RS. 75 CRORES GIVEN TO AHRL WHICH HAS NOT BEEN FOUND TO BE FALS E OR COLLUSIVE. 5. IN IGNORING THE LEGAL EFFECT OF THE AGREEMENT ENTERED INTO BY THE COMPANY WITH AHRL IN THE ORDINARY COURSE OF BUSINESS WHICH GAVE IT RIGHT TO MANAGE AHRL ASSETS AND CARRY ON THE BUSINESS OF LEASING. THE AGREEMENT IS BONA FIDE AND UNAMBIG UOUS AND CREATES CERTAIN LEGAL RIGHTS AND OBLIGATIONS WHICH HAVE BEEN ACTED UPON. 6. IN DISREGARDING THE TERMS AND CONDITIONS OF THE SAID AGREEMENT WHICH GAVE RIGHT TO THE COMPANY TO EXPLOIT AHRL ASSETS AGAINST A CONSIDERATION FOR A LIMITED DURATION WHICH HAS NOT BEEN FOUND TO BE FALSE OR COLLUSIVE WITHOUT PREJUDICE TO THE ABOVE AND WITHOUT ADMITTING 7. IN THE EVENT THE INCOME FROM LEASE RENTALS IS TAXED UNDER THE HEAD INCOME FROM BUSINESS AND PROFESSION IN THE ASESSEES HAND INSTEAD OF UNDER THE HAND INCOME FROM HOUSE PROPERTY THE BUSINESS EXPENSES INCURRED THERE TO BY THE ASSESSEE BE ALLOWED FROM THE SAID INCOME. 8. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL IN ITA NO. 6415/DEL/2015 FOR THE ASSESSMENT YEAR 2012 - 13: - 1. THAT THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS. 12 34 77 455/ - ON PROTECTIVE BASIS MADE ON ACCOUNT OF LEASE RENTAL INCOME IGNORING THE FACT THAT THE ASSESSEE COMPANY WAS NOT LEGAL OWNER OF THE PROPERTY WHICH LEASE RENTAL INCOME WERE SHOWN IN IT S ACCOUNTS. 2. (A) THE ORDER OF THE CIT (A) IS ERRONEOUS AND NOT TENABLE IN LAW AND ON FACTS. 9. THE BRIEF ISSUE INVOLVED IN APPEALS FILED BY THE REVENUE IN CASE OF AMBIENCE HOTELS AND RESORT PVT. LTD IS THAT LD CIT(A) HAS DELETED THE DCIT VS. AMBIENCE HOTELS & RESORTS PVT. LTD ITA NO. 6420 6421 6422/DEL/2015 & ITA NO. 6873/DEL/2014 872/DEL/2014 6415/DEL/2015 (ASSESSMENT YEAR: 2009 - 10 TO 2012 - 13) PAGE | 6 ADDITION ON ACCOUNT OF LEASE RENT TAXED IN THE HANDS OF THE ASSESSEE BY THE AO IS DELETED. 10. ON THE DATE OF HEARING ON 14.11.2017 THE LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSUE INVOLVED IN THESE APPEALS IS COVERED BY THE DECISION OF THE COORDINATE BENCH DATED 07.07.2017 FOR ITA NO. 345 AND 355/DEL/2014 AND ITA NO. 413/DEL/2014. HE FURTH ER SUBMITTED THAT THE ASSESSEE S MISCELLANEOUS APPLICATION FILED ON 16.08.2007 FOR RECTIFICATION OF THE ORDER OF THE COORDINATE BENCH ARE PENDING FOR DECISION. HE THEREFORE SUBMITTED THAT THESE APPEALS MAY BE ADJOURNED TILL THE DECISION IN THE MISCELLANE OUS APPLICATION. 11. THE LD DR STRONGLY OBJECTED TO THIS AND SUBMITTED THAT WHATEVER MAY BE THE DECISION IN THAT PARTICULAR MISCELLANEOUS APPLICATION IT SHALL APPLY IF THE ASSESSEE PREFERS SIMILAR MISCELLANEOUS APPLICATIONS IN THESE APPEALS TOO. HE SUBMITTED THAT ISSUE IS SQUARELY COVERED BY THE ORDER OF THE COORDINATE BENCH HENCE IT SHOULD BE DECIDED. 12. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS. THE BRIEF CONTROVERSY INVOLVED IS THAT IN WHOSE HANDS LEASE INCOME FROM SHOPS I S ASSESSABLE IN THE HAND S OF AMBIENCE HOTELS AND RESORT PVT. LTD OR AMBIENCE DEVELOPER AND INFRASTRUCTURES PVT. LTD. ACCORDING TO THE LD AO IT SHOULD BE CHARGED TO TAX IN THE HANDS OF AMBIENCE HOTELS AND RESORT PVT. LTD WHEREAS THE LD CIT(A) HELD THAT SAME IS CHARGEABLE TO TAX IN THE HANDS OF AMBIENCE DEVELOPERS AND INFRASTRUCTURE PVT. LTD. THE COORDINATE BENCH WHILE DECIDING THE APPEAL OF THE PARTIES FOR AY 2008 - 09 HAS ANSWERED THIS CONTROVERSY IN ITS ORDER DATED 07.07.2017 AS UNDER: - 4. THE APPELLANT M/S. AMBIENCE HOTELS & RESORTS PVT. LTD. (HEREINAFTER REFERRED TO AS THE ASSESSEE) IN ITA NO.355/DEL/2014 BY FILING THE PRESENT APPEAL SOUGHT TO SET ASIDE THE IMPUGNED DCIT VS. AMBIENCE HOTELS & RESORTS PVT. LTD ITA NO. 6420 6421 6422/DEL/2015 & ITA NO. 6873/DEL/2014 872/DEL/2014 6415/DEL/2015 (ASSESSMENT YEAR: 2009 - 10 TO 2012 - 13) PAGE | 7 ORDER DATED 01.10.2013 PASSED BY THE COMMISSIONER OF INCOME - TAX (APPEALS) - XXXII NEW DELHI QUA THE ASSESSMENT YEAR 2008 - 09 ON THE GROUNDS INTER ALIA THAT : - ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER : - 1. IN ASSESSING THE INCOME FROM LEASING OF ITS RETAIL SPACES IN ITS HANDS WHEN THE SAME HAD BEEN TRANSFERRED BY IT AND HAD BEEN LEGALLY AND RIGHT FULLY ENJOYED AND OFFERED FOR TAXATION BY M/S. AMBIENCE DEVELOPERS AND INFRASTRUCTURES PVT. LTD. (ADIPL) UNDER AN AGREEMENT AGAINST THE ADVANCE OF INTEREST FREE DEPOSIT OF RS.75 CRORES FROM ADIPL. 2. IN NOT TAKING JUDICIAL NOTICE OF THE FACT THAT THE APPELLANT COMPANY HAD BY AN AGREEMENT GIVEN TO ADIPL UNFETTERED RIGHTS TO LET - OUT AND MANAGE ITS RETAIL SPACES AND TO RECEIVE AND APPROPRIATE TO ITS OWN ACCOUNT ALL RECEIPTS AND RECEIVABLES FROM THE LEASING OF ITS RETAIL SPACES IN LIEU OF INTEREST FREE DEPOSIT OF RS.75 CRORES RECEIVED FROM IT WHICH IT NEEDED FOR COMPLETION OF ITS HOTEL PROJECT. 3. IN NOT RECOGNIZING THA T SECTION 60 IS NOT APPLICABLE IF THE INCOME IS DERIVED NOT FROM TRANSFER OF ASSETS BUT BY REASON OF THE RIGHT TO MANAGE AND CARRY ON BUSINESS. 4. IN IGNORING THE LEGAL EFFECT OF THE AGREEMENT ENTERED INTO BY THE COMPANY WITH ADIPL IN THE ORDINARY COURSE OF BUSINESS GIVING IT RIGHT TO MANAGE ITS ASSETS AND CARRY ON THE BUSINESS OF LEASING. THE AGREEMENT IS BONA FIDE AND UNAMBIGUOUS AND CREATES CERTAIN LEGAL RIGHTS AND OBLIGATIONS WHICH HAVE BEEN ACTED UPON. 5. IN DISREGARDING THE TERMS AND CONDITIONS OF THE SAID AGREEMENT WHICH GAVE RIGHT TO ADIPL TO EXPLOIT ITS ASSETS AGAINST A CONSIDERATION FOR A LIMITED DURATION WHICH HAS NOT BEEN FOUND TO BE FALSE OR COLLUSIVE. 5. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICATION OF THE CONTROVERSY AT HAND IN ALL T HE AFORESAID THREE APPEALS ARE : DCIT VS. AMBIENCE HOTELS & RESORTS PVT. LTD ITA NO. 6420 6421 6422/DEL/2015 & ITA NO. 6873/DEL/2014 872/DEL/2014 6415/DEL/2015 (ASSESSMENT YEAR: 2009 - 10 TO 2012 - 13) PAGE | 8 ORIGINALLY ASSESSMENT WAS COMPLETED IN CASE OF M/S. AMBIENCE DEVELOPERS & INFRASTRUCTURE PVT. LTD. (IN SHORT ADIPL) AND M/S. AMBIENCE HOTELS & RESORTS PVT. LTD. (IN SHORT AHRPL) ON 31.12.2009 AT RS.3 82 40 3030/ - AND RS.5 73 28 357/ - RESPECTIVELY UNDER SECTION 143 (3) OF THE INCOME - TAX ACT 1961 (FOR SHORT THE ACT). SUBSEQUENTLY THE COMMISSIONER OF INCOME - TAX CENTRAL - II NEW DELHI VIDE ORDER DATED 29.03.2012 SET ASIDE THE ASSESSMENT ORDER U/S 263 OF THE ACT AND DIRECT ED THE ASSESSING OFFICER TO ASSESS THE LEASE INCOME FROM LEASING OF SHOPS/RENTAL SPACE IN THE HOTEL IN ASSESSEES HAND AFTER MAKING PROPER ENQUIRIES AND VERIFICATION. 6. DURING THE ASSESSMENT PROCEEDINGS AO NOTICED IN CASE OF ADIPL THAT ASSESSEE HAS PROJE CTED LEASE AND LICENCE CHARGES OF RS.29 18 07 201/ - WHICH INCLUDES LEASE RENTAL OF RS.6 27 84 240/ - PERTAINING TO LEASING OF RETAIL SPACE IN AMBIENCE HOTEL GURGAON IN ITS RETURN OF INCOME. AO FURTHER NOTICED THAT THE SPACE IN QUESTION IS OWNERSHIP OF AH RPL BUT ASSESSEE IS SHOWING INCOME FROM LETTING OUT THE SHOP AND SPACE IN ITS HANDS ON THE BASIS OF SOME AGREEMENT ENTERED INTO BETWEEN ADIPL AND AHRPL FOR A CONSIDERATION OF RS.75 00 00 000/ - . AO CAME TO THE CONCLUSION THAT SINCE THE INCOME OF RS.6 27 84 240/ - BEING LEASE RENTAL HAS ALREADY BEEN TAXED IN THE HANDS OF OWNER COMPANY NAMELY ADIPL INVOKED THE PROVISIONS OF SECTION 22 OF THE ACT AND TAXED THE RENTAL INCOME IN THE HANDS OF THE OWNER OF THE PROPERTY AHRPL AS NO TRANSFER OF PROPERTY HAS TAKEN PLACE. AO HAS NOT REDUCED THE AMOUNT OF RS.6 27 84 240/ - FROM THE ASSESSEES (ADIPL) INCOME AND ALSO ASSESSED THE SAME IN THE HANDS OF ADIPL ON PROTECTIVE BASIS AND MADE SUBSTANTIVE ADDITION IN RESPECT OF THIS INCOME IN RESPECT OF AHRPL. AO ASSESSED THE TOTAL INCOME OF AHRPL AT RS.4 41 54 580/ - U/S 143 (3)/263 OF THE ACT. 7. ASSESSEES NAMELY M/S. AMBIENCE DEVELOPERS & INFRASTRUCTURE PVT. LTD. (ADIPL) AND M/S. AMBIENCE HOTELS & RESORTS PVT. LTD. (AHRPL) CARRIED THE MATTER BEFORE THE LD. CIT (A) BY WAY O F FILING APPEALS WHO HAS DISMISSED BOTH THE APPEALS VIDE ORDE4R DATED 01.10.2013. FEELING AGGRIEVED THE ASSESSEES AS WELL AS THE REVENUE HAVE COME UP IN APPEALS BEFORE THE TRIBUNAL. 8. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO TH E APPEAL GONE THROUGH THE DOCUMENTS RELIED UPON AND DCIT VS. AMBIENCE HOTELS & RESORTS PVT. LTD ITA NO. 6420 6421 6422/DEL/2015 & ITA NO. 6873/DEL/2014 872/DEL/2014 6415/DEL/2015 (ASSESSMENT YEAR: 2009 - 10 TO 2012 - 13) PAGE | 9 ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN THE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 9. UNDISPUTEDLY AHRPL IS THE OWNER OF SHOPS / RETAIL SPACE IN ITS PREMISES AND HAS EARNED LEASE RE NTAL THEREFROM TO THE TUNE OF RS.6 27 84 240/ - DURING THE YEAR UNDER ASSESSMENT. IT IS ALSO NOT IN DISPUTE THAT AHRPL HAS CLAIMED TDS OF RS.1 09 32 212/ - WITHOUT OFFERING CORRESPONDING INCOME FOR TAXATION. IT IS ALSO NOT IN DISPUTE THAT ORDER PASSED U/S 263 OF THE ACT BY LD. CIT HAS ALSO BEEN UPHELD BY THE TRIBUNAL VIDE ORDER DATED 16.06.2015. 10. FROM THE AFORESAID UNDISPUTED FACTS GROUNDS OF APPEAL RAISED BY THE ASSESSEE AS WELL AS BY THE REVENUE AND THE ARGUMENTS ADDRESSED BY LD. AUTHORIZED REPRESENTA TIVES TO THE PARTIES OF THE APPEAL THE SOLE QUESTION ARISES FOR DETERMINATION IN THIS CASE IS : - AS TO WHETHER LEASE RENTAL OF RS.6 27 84 240/ - QUA THE SHOPS/ RETAIL SPACE IN THE HOTEL OWNED BY AHRPL IS TO BE TAXED IN THE HANDS OF ADIPL ON THE BASIS OF AGREEMENT DATED 31.03.2008 ENTERED INTO BETWEEN AHRPL AND ADIPL FOR A CONSIDERATION OF INTEREST FREE REFUNDABLE DEPOSIT OF RS.75 00 00 000/ - OR IN THE HANDS OF AHRPL BEING OWNER OF THE SHOPS / RETAIL SPACE? 11. LD. AR FOR THE ASSESSEE BY INVOKING THE PRIN CIPLE OF BENEFICIAL OWNER CONTENDED THAT LEASE RENTAL INCOME HAS BEEN DERIVED BY THE ASSESSEE ON THE BASIS OF ITS RIGHT TO MANAGE AND CARRY ON BUSINESS AS PER AGREEMENT (SUPRA) ENTERED INTO BETWEEN THE AHRPL AND ADIPL AND RELIED UPON DECISION RENDERED BY HONBLE APEX COURT IN CIT VS. PODDAR CEMENT PVT. LTD. (1997) 226 ITR 625 (SC) . 12. THE RATIO OF THE DECISION RENDERED BY HONBLE APEX COURT IN THE CASE OF PODDAR CEMENT PVT. LTD. (SUPRA) IS THAT A PERSON WHO IS ENTITLED TO ENJOY THE INCOME FROM THE PROP ERTY WAS LIABLE TO TAX ON SUCH INCOME ON THE PRINCIPLE THAT WHO HAS THE BENEFIT WILL HAVE THE BURDEN AS WELL AND REQUIREMENT OF OWNERSHIP ON THE BASIS OF TITLE IS NOT REQUIRED FOR TAXING THE INCOME. 13. IN THE INSTANT CASE THE ENTIRE ARRANGEMENT OF TRANSF ERRING OF SHOPS AND RETAIL SPACE BY AHRPL TO ADIPL IS BASED UPON AGREEMENT DATED 31.03.2008 ENTERED INTO BETWEEN THE AHRPL DCIT VS. AMBIENCE HOTELS & RESORTS PVT. LTD ITA NO. 6420 6421 6422/DEL/2015 & ITA NO. 6873/DEL/2014 872/DEL/2014 6415/DEL/2015 (ASSESSMENT YEAR: 2009 - 10 TO 2012 - 13) PAGE | 10 AND ADIPL THE OPERATIVE CLAUSES THEREOF ARE REPRODUCED AS UNDER FOR READY REFERENCE : - 1. THAT IN CONSIDERATION OF ABOVESAID DEPOSI T OF RS.75 00 000/ - (RUPEES SEVENTY FIVE CRORES ONLY) THE FIRST PARTY DOTH HEREBY AGREES TO GRANT AND ASSIGN IN FAVOUR OF THE SECOND PARTY ALL ITS RIGHTS AND INTEREST TO LEASE AND MANAGE THE SAID SPACE OR ANY PART THEREOF AND TO RECEIVE AND APPROPRIATE T O ITS OWN ACCOUNT ALL RECEIPTS AND RECEIVABLES FROM THE LEASING OF SAID SPACE OR ANY PART THEREOF. 2. THAT THE AFORESAID SUM OF RS.75 00 00 000/ - (RUPEES SEVENTY FIVE CRORES ONLY) HAS BEEN PAID BY THE SECOND PARTY TO THE FIRST PARTY (THE RECEIPT WHEREOF THE FIRST PARTY HEREBY ADMITS AND ACKNOWLEDGES) AS AN INTEREST - FREE REFUNDABLE DEPOSIT THE FIRST PARTY MAY REFUND THE SAID INTEREST - FREE DEPOSIT BY GIVING A ONE YEAR NOTICE IN WRITING AT ANY TIME AFTER THE INITIAL PERIOD OF THREE YEARS. HOWEVER THE TENUR E OF THIS AGREEMENT SHALL NOT EXCEED 10 YEARS AND FIRST PARTY SHALL REFUND THE SAID REFUNDABLE SECURITY DEPOSIT TO THE SECOND PARTY AND SIMULTANEOUSLY THE SECOND PARTY SHALL SURRENDER ITS RIGHTS FOR SUB - LETTING AND MANAGING THE SAID SPACE TO THE FIRST PART Y. 3. THAT THIS AGREEMENT SHALL BE DEEMED TO BE EFFECTIVE FROM THE DATE OF THIS AGREEMENT OR THE DATE OF THE AGREEMENT FOR TAKING POSSESSION FOR FIT OUT(S) ENTERED INTO WITH TENANTS/OCCUPANTS OF THE VARIOUS RETAIL SPACES COMPRISING THE SAID SPACE OR ANY PART THEREOF BY THE FIRST PARTY WHICHEVER IS EARLIER. 4 THAT THE SECOND PARTY SHALL BE ENTITLED TO RECEIVE THE MONTHLY RENT OR OTHER CHARGES/INCLUDING THE ARREARS OF RENT / CHARGES IF ANY FROM THE TENANTS OR PERSONS IN OCCUPATION OF THEIR RESPECTIVE POR TION IN THE SAID SPACE IN ITS OWN NAME AND ALL THESE TENANTS/OCCUPANTS SHALL BE DEEMED TO BE THE TENANTS/ OCCUPANTS OF THE SECOND PARTY AND THE SECOND PARTY SHALL HAVE THE RIGHT TO RECEIVE THE RENT OR CHARGES FROM THEM DURING THE CURRENCY OF THIS AGREEMENT AND ALSO DCIT VS. AMBIENCE HOTELS & RESORTS PVT. LTD ITA NO. 6420 6421 6422/DEL/2015 & ITA NO. 6873/DEL/2014 872/DEL/2014 6415/DEL/2015 (ASSESSMENT YEAR: 2009 - 10 TO 2012 - 13) PAGE | 11 TO DEAL/NEGOTIATE WITH THE SAID TENANTS OCCUPANTS IN THE MANNER THE SECOND PARTY DEEM FIT AND PROPER. 14. WHEN WE PERUSE THE RECITALS OF THE AGREEMENT (SUPRA) REPRODUCED ABOVE PARTICULARLY CLAUSE 4 IT GOES TO UNEQUIVOCALLY PROVE THAT THE SECON D PARTY TO THE AGREEMENT (SUPRA) NAMELY ADIPL IS ENTITLED TO RECEIVE THE RENT OR THE CHARGES FROM THE TENANTS/OCCUPANTS DURING THE CURRENCY OF THIS AGREEMENT. WHEN ADIPL HAS GOT RIGHTS AND INTEREST IN THE PROPERTY IN QUESTION BY VIRTUE OF THE AGREEMENT (SUPRA) W.E.F. 31.03.2008 THEN IT IS ESTOPPED BY ITS OWN ACT AND CONDUCT FROM SHOWING THE INCOME FROM THE RENTAL OF THE SHOPS AND RENTAL SPACE IN ITS HANDS FOR THE EARLIER PERIOD PRIOR TO 31.03.2008. 15. IN THE GIVEN CIRCUMSTANCES THE LD. CIT (A) HAS RIGH TLY UPHELD THE ADDITION OF RS.4 39 48 968/ - IN THE HANDS OF AHRPL UNDER THE HEAD INCOME FROM HOUSE PROPERTY BY RETURNING FOLLOWING FINDINGS : - 5.1.5 ON PERUSAL OF THE DETAILS ON RECORD I FIND THAT THE APPELLANT COMPANY ADIPL EVEN AFTER SHOWING THE ABOV E LEASE INCOME IN ITS HANDS HAD DECLARED LOSS FOR THE YEAR UNDER CONSIDERATION IN ITS RETURN WHERE AS THE APPELLANT COMPANY I.E. AHRL WAS RUNNING INTO PROFITS. IN MY CONSIDERED VIEW THE ENTIRE ARRANGEMENT WAS MADE BY THE APPELLANT TO AVOID INCIDENCE OF TAX IN ITS HANDS. RELIANCE IS PLACED IN THE PRESENT CASE ON THE JUDICIAL PRONOUNCEMENT OF THE HON'BLE APEX COURT IN THE CASE OF SMT. TARA DEVI AGGARWAL WHICH IS CLEARLY APPLICABLE IN THIS CASE. ADIPL A LOSS MAKING COMPANY HAD SHOWN THE INCOME BELONGING ITS GROUP COMPANY I.E. THE APPELLANT COMPANY AHRL A PROFIT MAKING COMPANY IN ITS RETURN TO BE ASSESSED IN ITS HANDS IN ORDER TO ASSIST THE APPELLANT COMPANY TO AVOID TAX PAYMENT. SECTION 60 IS MERELY A DECLARATORY OF A PRINCIPLE WHICH IS WELL SETTLED UN DER THE INCOME TAX LAW NAMELY THE PROFITS ON THEIR COMING INTO EXISTENCE ATTRACT TAX AT THAT POINT AND THE REVENUE IS NOT CONCERNED WITH THE SUBSEQUENT APPLICATION OF THE PROFITS. 16. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE WE ARE OF THE CONSIDERED V IEW THAT THE ASSESSEE ADIPL IN THIS CASE IS NOT ENTITLED FOR RELIEF BEING BENEFICIAL OWNER ON THE BASIS OF THE JUDGMENT OF PODDAR CEMENT PVT. LTD. (SUPRA) WHICH IS NOT DCIT VS. AMBIENCE HOTELS & RESORTS PVT. LTD ITA NO. 6420 6421 6422/DEL/2015 & ITA NO. 6873/DEL/2014 872/DEL/2014 6415/DEL/2015 (ASSESSMENT YEAR: 2009 - 10 TO 2012 - 13) PAGE | 12 APPLICABLE TO THE FACTS AND CIRCUMSTANCES OF THE CASE RATHER AN AGREEMENT (SUPRA) BETWE EN AHRPL AND ADIPL IS A CAMOUFLAGE PARTICULARLY IN THE FACE OF THE ADMITTED FACT THAT AHRPL BEING OWNER OF PROPERTY IN QUESTION CLAIMED TDS OF RS.1 09 32 212/ - WITHOUT OFFERING CORRESPONDING INCOME FOR TAXATION TO EVADE THE PAYMENT OF TAX TO THE STATE EXCH EQUER. SO WE FIND NO ILLEGALITY OR PERVERSITY IN THE FINDINGS RETURNED BY LD. CIT (A) IN THE IMPUGNED ORDER DATED 01.10.2013 UNDER CHALLENGE VIDE ITA NO.355/DEL/2014. HOWEVER WHEN SUBSTANTIVE ADDITION QUA THE SAME AMOUNT OF RS.6 27 84 240/ - HAS ALREADY BEEN MADE IN CASE OF AHRPL THERE IS NO QUESTION CONFIRMING THE PROTECTIVE ADDITION OF RS.6 27 84 240/ - IN CASE OF ADIPL BY THE LD. CIT (A) BECAUSE ONE INCOME CANNOT BE TAXED TWICE. SO ITA NOS.354/DEL/2014 & 355/DEL/2015 FILED BY THE ASSESSEE ARE HEREBY DISMISSED. CONSEQUENTLY ITA NO.413/DEL/2014 FILED BY THE REVENUE IS ALSO DISMISSED HAVING BEEN BECOME INFRUCTUOUS. 13. THE COORDINATE BENCH HAS HELD THAT SUBSTANTIVE ADDITION OF THE LEASE RENT IS REQUIRED TO BE MADE IN CASE OF AMBIENCE HOTELS AND RESORTS PVT. LTD AND PROTECTIVE ADDITION IN THE HANDS OF AMBIENCE DEVELOPER AND INFRASTRUCTURES PVT. LTD IS REQUIRED TO BE DELETED. THEREFORE RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINATE BENCH WE ALSO HELD THAT SUBSTANTIVE ADDITION WITH RESPECT TO LEASE INCOME IS REQUIRED TO BE MADE IN THE HANDS OF THE AMBIENCE HOTEL AND RESORT PVT. LTD. CONSEQUENTLY THE GROUNDS OF APPEAL O F THE REVENUE FOR ASSESSMENT YEAR 2009 - 10 TO 2012 - 13 IN CASE OF AMBIENCE HOTELS AND RESORTS PVT. LTD REGARDING TAXABILITY OF LEASE RENT ARE ALLOWED. 14. SIMILARLY THE APPEALS OF THE REVENUE AND CROSS OBJECTION OF THE ASSESSEE FOR THESE YEARS IN CASE OF AMBIE NCE DEVELOPERS AND INFRASTRUCTURE LTD ARE DISMISSED BECAUSE IN THAT PARTICULAR THE ADDITION WAS MADE ON PROTECTIVE BASIS WHICH IS UPHELD ON SUBSTANTIVE BASIS NOW IN THE HANDS OF AMBIENCE HOTELS AND RESORT PVT. LTD. DCIT VS. AMBIENCE HOTELS & RESORTS PVT. LTD ITA NO. 6420 6421 6422/DEL/2015 & ITA NO. 6873/DEL/2014 872/DEL/2014 6415/DEL/2015 (ASSESSMENT YEAR: 2009 - 10 TO 2012 - 13) PAGE | 13 15. ITA NO. 6421/DEL/2015 FOR ASSESSMENT YEA R 2010 - 11 THE REVENUE HAS ALSO RAISED A GROUND WHERE THE LD CIT(A) HAS RESTRICTED THE DISALLOWANCE MADE U/S 14A OF RS. 3686230/ - TO RS. 17317/ - . 16. THE BRIEF FACTS OF THE CASE IS THAT ASSESSEE HAS MADE AN INVESTMENT OF RS. 125 CRORES IN THE SHARES OF ONE O F THE COMPANIES HOWEVER NO DISALLOWANCE U/S 14A OF THE ACT WERE MADE. THEREFORE THE LD ASSESSING OFFICER APPLYING THE RATIO OF RULE 8D MADE DISALLOWANCE OF RS. 3686230/ - . THE ASSESSEE AGGRIEVED WITH THE ORDER OF THE LD CIT(A) PREFERRED APPEAL BEFORE T HE LD CIT(A) HAS RESTRICTED THE DISALLOWANCE OF 0.5% ONLY ON THE INVESTMENTS WHICH HAS GIVEN DIVIDEND DURING THE YEAR. THE LD CIT(A) RELIED UPON THE DECISION OF HON'BLE DELHI HIGH COURT IN CASE OF ACG INDIA LTD VS. ACIT 374 ITR 108. 17. THE LD DEPARTMENTAL REPRESENTATIVE COULD NOT POINT OUT ANY ERROR IN THE ORDER OF THE LD CIT(A). IN VIEW OF THIS GROUND OF APPEAL OF THE REVENUE IS DISMISSED. 18. IN ITA NO. 6422/DEL/2015 VIDE GROUND NO. 3 THE REVENUE HAS RAISED THAT LD CIT(A) ERRED IN DELET ING THE ADDITION OF RS. 6285102/ - U/S 14A OF THE INCOME TAX ACT. THE LD CIT(A) DELETED THE ABOVE DISALLOWANCE AS NO EXEMPT INCOME WAS RECEIVED DURING THE YEAR. 19. THE LD DR COULD NOT SHOW US THAT DURING THE YEAR ASSESSEE HAS EARNED ANY EXEMPT INCOME. HENCE RESPECTFULLY FOLLOWING THE DECISION OF THE HON'BLE DELHI HIGH COURT IN CHEMINVEST LTD VS. CIT 378 ITR 33 WE CONFIRM THE ORDER OF THE LD CIT(A). ACCORDINGLY GROUND NO. 3 OF THE APPEAL OF THE REVENUE IS DISMISSED. 20. IN THE RESULT APPEAL OF THE REVENUE IN CASE OF AMBIENCE HOTELS AND RESORTS PVT LTD IN ITA NO. 6420 6873 6421 AND 6422/DEL/2015 ARE PARTLY ALLOWED. DCIT VS. AMBIENCE HOTELS & RESORTS PVT. LTD ITA NO. 6420 6421 6422/DEL/2015 & ITA NO. 6873/DEL/2014 872/DEL/2014 6415/DEL/2015 (ASSESSMENT YEAR: 2009 - 10 TO 2012 - 13) PAGE | 14 21. THE APPEAL OF THE REVENUE IN CASE OF AMBIENCE DEVELOPERS AND INFRASTRUCTURE PVT. LTD IN ITA NO. 6872/DEL/ 2014 AND 6415/DEL/2015 AND CROSS OBJECTION OF THE ASSESSEE NO. 377/DEL/2015 ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 2 0 / 11 /2017. - S D / - - S D / - ( H.S.SIDHU ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 2 0 / 11 /2017 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT NEW DELHI