Delhi High Court
M/S Asian Hotels Ltd vs Commissioner Of Income Tax on 9 October, 2023
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* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment Pronounced on: 09.10.2023
+ ITA 1394/2006
M/S ASIAN HOTELS LTD ..... Appellant
Through : Mr Tarun Gulati, Sr. Adv. with Ms
Aakanksha Kaul, Mr Aman Sahai, Mr
Kumar Sambhav and Mr Adit
Khorana, Advs.
versus
COMMISSIONER OF INCOME TAX ..... Respondent
Through : Mr Zoheb Hossain, Sr. Standing
Counsel with Mr Sanjeev Menon, Jr
Standing Counsel.
CORAM:
HON'BLE MR JUSTICE RAJIV SHAKDHER
HON'BLE MS JUSTICE TARA VITASTA GANJU
[Physical Court hearing/ Hybrid hearing (as per request)]
RAJIV SHAKDHER, J.:
1. This appeal concerns Assessment Year (AY) 1991-92. Via the instant
appeal, the appellant/assessee seeks to assail the order dated 28.04.2006
passed by the Income Tax Appellate Tribunal [in short, "Tribunal"] in ITA
No.323/Del/95.
1.1 The impugned order has been passed in the appeals concerning AY
1991-92 to AY 1994-95.
2. Via order dated 18.09.2007, a coordinate bench of this court, insofar
as this appeal is concerned, framed the following substantial questions of
law:
"(1) Whether the finding of the Income Tax Appellate Tribunal that the
"renovation and repair" expenses, partly capitalized in the books of account
Signature Not Verified
Digitally Signed By:TARUN
RANA
Signing Date:10.10.2023
11:32:37
of the Assessee is not the revenue expenditure admissible under Section 37
of the Income Tax Act, 1961 is correct?
(2) Whether the Income Tax Appellate Tribunal is correct in law in
holding that payment made to Gherzi Eastern Ltd., an interior architect,
Rs.11 lakhs for consultancy and supervision of interior décor of the existing
hotel of the Assessee under "renovation and refurbishment" is capital
expenditure?"
3. We have dealt with pari materia substantial questions of law while
deciding ITA No.1398/2006, concerning AY 1992-93, which was treated as
the lead matter with the consent of counsels for the parties.
4. We may note that the only difference that obtains in the questions of
law framed in ITA No.1398/2006 concerns the quantum of fees paid to the
consultant.
4.1. In the instant AY, i.e., AY 1991-92, the fees paid to GEL [hereafter
referred to as "GEL"] was Rs.11,00,000/-, whereas, in AY 1992-93, GEL
was paid fees amounting to Rs.23,18,695/-.
5. We may note that the Assessing Officer (AO) via the assessment
order had inter alia, disallowed Rs.11,00,000/- paid by the appellant/assessee
as a professional/technical fee to GEL.
5.1 In an appeal filed by the appellant/assessee, Commissioner of Income
Tax (Appeals) [in short, "CIT(A)"] via order dated 31.10.1994 upheld the
AO's order.
6. In an appeal filed by the appellant/assessee, the Tribunal sustained the
order of the CIT(A) and dismissed the appellant/assessee's appeal.
7. Having regard to the judgment rendered in ITA No.1398/2006, the
instant appeal is disposed of with the following directions, as the view taken
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Digitally Signed By:TARUN
RANA
Signing Date:10.10.2023
11:32:37
in the said appeal will apply mutatis mutandis to the instant case as well:
8. The appellant/assessee will be entitled to claim the following deduction,
as, in our opinion, it is in the nature of revenue expenditure:
(i) Rs.11,00,000/- incurred on payment of fees to GEL.
9. Thus, the substantial questions of law as framed are answered in favour
of the appellant/assessee and against the revenue.
10. The appeal is disposed of in the aforesaid terms.
(RAJIV SHAKDHER)
JUDGE
(TARA VITASTA GANJU)
JUDGE
OCTOBER 9, 2023/aj
Signature Not Verified
Digitally Signed By:TARUN
RANA
Signing Date:10.10.2023
11:32:37
