LE MAGNIFIQUE,PANAJI vs. NFAC, DELHI

Assessee has raised following grounds of appeal :- 1) These grounds of appeal are taken independently of each other. 2) The order of the CIT(Appeals) is opposed to the law and to the facts of the case. 3) The CIT(Appeals) has erred in holding that the turnover of Rs. 78,20,125/- (i.e. where the customers had deducted TDS u/s 1941) was required to be taxed as income from House Property. 4) The CIT(Appeals) has erred in not appreciating the fact that your appellant is in the business of running a hotel, and the turnover of Rs. 78,20,125/- (i.e. where the customers had deducted TDS u/s 1941) was already considered under the head of Profits and Gains of Business. 5) The CIT(Appeals) has erred in not appreciating the fact that your appellant is in the business of running a hotel, and the hotel premises are used for the business of running a hotel, and thus could not be considered as House Property. 6) The CIT(Appeals) has erred in not appreciating the fact that the hotel premises operated by your appellant cannot be said to be simultaneously used for the purpose of business, and also for purposes other than business. 7) Your appellant craves leave to modify these grounds of appeal.

Brief facts of the case are that the assesse is a partnership firm engaged in the business of running Hotel located at Porvorim, Goa. Income of Rs. 17,10,000/- declared in the Return of Income for A.Y. 2023-24. The case selected for scrutiny through CASS followed by validly issuing notices u/s 143(2) and 142(1) of the Act. During the course of assessment proceedings, Ld. Assessing Officer (AO) observed that in Form No. 26AS, Tax deducted at Source u/s 194I(b) of the Act on the rental income of Rs. 78,20,125/- but no rental income has been shown in the Profit and Loss Account and Income Tax Return. It was submitted by the assessee that the assessee is running a Hotel and few Companies including Banks take the room on rent for a longer period and Tax has been deducted at source. It is also claimed that the alleged rental income at Rs. 78,20,125/- is duly disclosed in the Books of financial statements and is part of the gross turnover for the year at Rs. 1,78,54,700/- However Ld. Assessing Officer (AO) was not satisfied and he after allowing the deduction @ 30% on the allowed rental income and also allowed the

Aggrieved assesse is now in appeal before this Tribunal. Ld. Counsel for the assessee submitted that the alleged sum of Rs. 78,20,125/- which is treated as income from House Property by Ld. AO is actually the room rent and part of the gross turnover of the business receipts of the Hotel. He submitted that copies of agreement of the assessee with Canara Bank, Reserve Bank of India and New Mutual Society and the invoices raised by the assessee to these parties are placed in Paper Book running from Page 4-73 clearly explains that the assessee has received room rent from these three parties as part of the Hotel business and are to be taxed as business receipt and not as income from House Property. He however fairly admitted that these documents are additional evidence and the same may be restored to the file of Ld. CIT(A) for necessary adjudication.

On the other hand Ld. Departmental Representative (DR) supported the orders of Ld. CIT(A).

We have heard rival contentions and perused the record placed before us. The grievance of the assesse is against the addition of Rs. 47,25,131/- made by Ld. AO treating the gross receipts of Rs. 78,20,125/- as income from House Property, based upon the information in Form 26AS showing the deduction of Tax at Source u/s 194I(b) of the Act.

Before us Ld. Counsel for the assessee making reference to the additional evidence placed in the Paper Book running from page No. 1 to 75 has contended that the assessee has entered into agreement with Canara Bank, Reserve Bank of India and New Mutual Society who takes room on rent for a longer period as mentioned in the agreement and such room rent received from these parties is a business receipt and not income from House Property. It is also clear that gross turnover of the assessee firm disclosed in the books includes the alleged rental income from above referred three parties. However, considering the fact that these additional evidences were not placed before the lower authorities and goes to the root cause of impugned addition, we deem it appropriate to remit back all the issues raised in the instant appeal to the file of Ld. Jurisdictional Assessing Officer (JAO) for denovo adjudication. Ld. AO is directed to consider the additional evidence placed before this Tribunal and thereafter decide in accordance with law. Needless to mention that proper opportunity of hearing shall be given to the assessee. Assessee is also directed to remain vigilant and not to take adjournment unless otherwise required for reasonable cause. The impugned order is set aside and the grounds of appeal raised by assessee are allowed for statistical purposes.

In the result appeal of the assessee is allowed for statistical purposes.