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Income Tax Appellate Tribunal, MUMBAI BENCHES “E”, MUMBAI
Before: Shri Saktijit Dey, JM & Shri Manoj Kumar Aggarwal, AM
O R D E R Per Saktijit Dey, Judicial Member:
This is an appeal by the department against the order dated 03.09.2007 of learned CIT(A)-IX, Mumbai, for A.Y. 2003-04.
The only ground raised by the department is in relation to the deletion of addition of an amount of `.32,21,213/- towards license fees receivable
Briefly, facts are the assessee, a company, is in the hotel business. In the course of assessment proceedings for the year under consideration, the AO noticed that on 01.07.1986, the assessee had entered into an operating license agreement with M/s. ITC Ltd., as per which ITC Limited was supposed to pay the assessee license fees @23% of the gross turnover of Sea Rock Hotel in each financial year. It further provided, the turnover for each financial year has to be certified by the auditors and same shall be final and binding on the parties. He also observed that as per the agreement ITC shall pay license fees in arrears and such license fees will become due and payable to the assessee when the license fees accumulated to `.1 crore as per the calculation based on the agreement. However, the AO found that the assessee has not offered any income on account of license fees receivable from ITC Limited. When called upon to explain, it was submitted by the assessee that since it has not received any payment from ITC, it has not offered such income. The AO did not accept assessee’s claim. He was of the view that the assessee has to offer income from license fees on accrual basis.
He noted that in F Y 2002-03, the total turnover for the hotel under consideration was `.1,40,05,275/-. By applying the rate of 23%, the AO worked out license fees of `.32,21,213/- and added back to the income of the assessee. The assessee challenged the addition before the CIT(A).
The leaned CIT(A) noticed that similar addition made in assessee’s own case for A.Ys. 1997-98 and 1995-96 have been deleted by the Tribunal and following the same deleted the addition made by the AO.
When the appeal was called for hearing no one was present for the assessee inspite of service of notice through RPAD. Therefore, we proceed to dispose of the appeal exparte, qua the assessee, after hearing the learned DR and on the basis of material available on record.
The learned DR fairly submitted before us that in earlier A.Ys the Tribunal has deleted the addition made by the AO on account of license fees receivable from ITC Ltd, which has been followed by the CIT(A). He further submitted that, in fact similar addition was made in the impugned assessment year also in proceedings initiated u/s. 153A of the Act pursuant to search and seizure operation. The learned DR submitted, while deciding the issue the Tribunal has deleted the addition. In this context he drew our attention to order dated 16.04.2010 in 4514/Del/2009 & Ors.
We have heard learned DR and perused the material on record. It is evident from the order of the CIT(A) that identical issue arose in assessee’s own case for A.Ys. 1995-96 and 1997-98 and the Tribunal has decided the issue in favour of the assessee by deleting the addition. In fact, in the assessment completed u/s. 143(3) r.w.s. 153A for the impugned assessment year, the AO made addition of identical amount on account of license fees receivable from ITC Ltd. However, the Tribunal while deciding the issue has upheld the order of the CIT(A) by deleting the addition(supra). That being the case, we do not find any infirmity in the order of the CIT(A). The ground raised is dismissed.
In the result, the appeal is dismissed.
Order pronounced in the open court on 3rd day of May 2017.