M/S.HOTEL & ALLIED PVT.LTD vs. DEPUTY COMMISSIONER OF INCOME TAX, ERNAKULAM

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ITA/12/2013HC KeralaKLHC01025897201309 January 2014Bench: HONOURABLE MR.JUSTICE A.M.SHAFFIQUE,HONOURABLE THE CHIEF JUSTICE DR. MANJULA CHELLUR5 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the Tribunal was justified in placing reliance on its earlier decision in Hotel & Allied Trades Pvt. Ltd. v. Deputy Commissioner of Income Tax [(2007) 294 ITR 67 (Ker.)] for the Section 80HHD issue, despite the pending appeal before the Apex Court, as no interim order had been granted. Regarding the interest under Section 234C, the Court found the Tribunal's decision to be in line with the Apex Court's ruling in Joint Commissioner of Income Tax v. Rolta India Ltd. [(2011) 330 ITR 470(SC)], which permits charging interest on tax calculated on book profit. The Tribunal's direction to assess interest from banks and dividends as 'income from other sources' under Section 56, rather than business income, was also upheld, citing the specific nature of Section 56. The disallowance of club expenses was remanded to the assessing officer for ascertainment of the nature of payment. The Court found no grounds to interfere with the Tribunal's findings, which considered the material on record and applicable law.

What were the facts?

The appellant, M/s. Hotel & Allied Pvt. Ltd., is a company engaged in the hotel business across multiple locations. The assessment year in question is 1997-98. The appeal challenges orders of the Income Tax Appellate Tribunal (ITAT), Cochin Bench, dated July 27, 2012. The primary disputes involve a sum of ₹1,95,243/- treated as income from other sources, deductions claimed under Section 80HHD by aggregating income from all units, and a levy of interest of ₹23,350/- under Section 234C. The ITAT's decision was based on previous High Court and Supreme Court rulings. The High Court notes that the issue concerning Section 80HHD is pending before the Apex Court.

What were the issues?

1. Whether the Tribunal erred in rejecting the assessee's claim for deduction under Section 80HHD by aggregating income from all units, relying on the High Court's earlier decision in Hotel & Allied Trades Pvt. Ltd. v. Deputy Commissioner of Income Tax [(2007) 294 ITR 67 (Ker.)]? - Assessee's contention: Not explicitly recorded, but implied challenge to the Tribunal's reliance on the prior High Court ruling, especially given the pending appeal before the Apex Court. - Revenue's contention: Not explicitly recorded, but implied support for the Tribunal's decision based on the High Court's precedent. 2. Whether the Tribunal was justified in upholding the levy of interest under Section 234C, considering the Supreme Court's decision in Joint Commissioner of Income Tax v. Rolta India Ltd. [(2011) 330 ITR 470(SC)]? - Assessee's contention: Not recorded. - Revenue's contention: Not recorded. 3. Whether the Tribunal was correct in directing that interest from banks and dividends be assessed as 'income from other sources' under Section 56, rather than as business income? - Assessee's contention: Not recorded. - Revenue's contention: Not recorded. 4. Whether the disallowance of club expenses was correctly remanded back to the assessing officer?

Which sections of the Income-tax Act were involved?

Section 80HHD,Section 234C,Section 115JA,Section 56

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HON'BLE THE CHIEF JUSTICE DR. MANJULA CHELLUR & THE HONOURABLE MR.JUSTICE A.M.SHAFFIQUE THURSDAY, THE 9TH DAY OF JANUARY 2014/19TH POUSHA, 1935 ITA.No. 12 of 2013 ------------------- AGAINST THE ORDER IN ITA 376/COCH/2005 of I.T.A.TRIBUNAL, COCHIN BENCH DATED 27-07-2012 ............. APPELLANT/APPELLANT/APPELLANT : ------------------------------------------ M/S.HOTEL & ALLIED PVT.LTD C/O CSINO HOTEL W/ISLAND, COCHIN-3. BY ADVS.SRI.JOSEPH MARKOSE (SR.) SRI.V.ABRAHAM MARKOS SRI.BINU MATHEW SRI.TOM THOMAS (KAKKUZHIYIL) SRI.ABRAHAM JOSEPH MARKOS SRI.ABRAHAM VARGHESE THARAKAN RESPONDENT/RESPONDENT/DEPARTMENT : ------------------------------------------------- DEPUTY COMMISSIONER OF INCOME TAX, ERNAKULAM ERNAKULAM. BY SRI.JOSE JOSEPH, SC, FOR INCOME TAX THIS INCOME TAX APPEAL HAVING COME UP FOR ADMISSION ON 09-01-2014, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

Manjula Chellur, C.J. & A.M. Shaffique, J. - - - - - - - - - - - - - - - - - - - - - - - - - - - - I.T.A. No. 12 OF 2013 - - - - - - - - - - - - - - - - - - - - - - - - - - - - Dated this the 9th day of January, 2014 JUDGMENT Manjula Chellur, C.J. It is not in dispute that the appellant assessee is a company engaged in Hotel business in different units at Kumarakam, Cochin and Bangaram Islands. The assessment year in question is 1997-98. Before the assessing officer several deductions were claimed. The controversy before us only pertains to `1,95,243/- as income from other sources, deductions alleged to have been wrongly worked out under Section 80HHD by taking all other units together and so also a sum of `23,350/- was levied as interest under Section 234C of the Income Tax Act. Aggrieved by the same, the appellant is before us challenging the orders of the appellate Tribunal. 2. So far as claim under Section 80HHD pertaining to the very same assessee an issue came up before this Court which went against the appellant/assessee as per the decision of this Court in Hotel & Allied Trades Pvt. Ltd. v. Deputy Commissioner of Income Tax [(2007) 294 ITR 67 (Ker.)].

ITA No. 12 of 2013 -:2:- Placing reliance on the same, Tribunal rejected the claim of the assessee. It is not in dispute that the earlier judgment of this Court is pending consideration in Civil Appeal before the Apex Court. However, no interim order of any nature is granted, though it is admitted that the appeal is of the year 2010. Therefore there is no irregularity or illegality so far as the Tribunal placing reliance on the earlier decision of this Court. 3. Then coming to the levy of interest under Section 234C, in the latest decision of the Apex Court in Joint Commissioner of Income Tax v. Rolta India Ltd. [(2011) 330 ITR 470(SC)], the controversy is concluded opining that interest can be charged on the tax calculated on book profit under Section 115JA(1) etc. 4. Then coming to the income from other sources with regard to `1,95,243/-, the Tribunal was justified in saying, in the light of special and specific provision under Section 56 of the Income Tax Act, the interest from bank and other dividends need to be assessed only as income from other sources and not the

ITA No. 12 of 2013 -:3:- business income of the appellant/assessee. So far as disallowance of club expenses, the matter is remanded back to the assessing officer to ascertain whether it was paid towards membership fee or otherwise. The Tribunal has gone into each and every controversy raised properly, taking into account the material on record and also law applicable therein. We do not find any good ground to interfere, accordingly, the appeal is dismissed. Manjula Chellur, Chief Justice. A.M. Shaffique, Judge.

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ITA No. 12 of 2013 -:4:-

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