TaxTMI 
TaxTMI 
TaxTMI 
2009 (11) TMI 657
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....ement of expenses to M/s. Cox & King (India) (P.) Ltd. and to M/s. Tulip Star Hotels (P.) Ltd. for assessment years 2004-05 and 2005-06 are liable to be deleted or confirmed?" 2. Regarding first point of difference - At the time of hearing before me, it is stated by the learned counsel for the assessee that the assessee-company is engaged in the business of operation and management of hotels owned by third parties. The assessee has taken over the management of the hotel property, viz., Tulip Star Mumbai, situated at Juhu Tara Road, Juhu, Mumbai. The assessee was redeveloping the said property into a multi-product hospitability destination and was also developing international standard Service Apartments. The assessee offered the space in the same property to Shri Somendra Khosla of UAE on a 99 year lease basis. After negotiation, Shri Khosla agreed to acquire the space admeasuring 12,700 sq. ft. at the rate of Rs. 7,500 per sq. ft. In pursuance to such booking of the property, Shri Khosla advanced the sum of Rs. 4,78,12,403 during the accounting year relevant to assessment year 2004-05 and the sum of Rs. 1,02,91,176 in the accounting year relevant to assessment year 2005-06. That,....
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....e above three ingredients to discharge the onus has duly been proved. From the copy of Passport, Chartered Accountant's certificate, telephone bill, electricity bill, Health Card, etc., the identity of the creditor, viz., Shri Somendra Khosla, is proved beyond doubt. That, as per certificate of the Chartered Accountant, properties owned by Shri Somendra Khosla, his wife and son is worth 46.78 million USD, which would be equivalent to Rs. 200 crores (approx.). That, his telephone bill for one month is of 3731 Dhs. which would be approximately Rs. 50,000 per month; his electricity bill per month is 5287 Dhs. and water bill is 1816 Dhs. That the news published in Gulf News of UAE on 22-1-2007, shows that the New World Real Estate, a regional real estate company, has notched up the sale of 1.1 billion Dhs. in the last year, i.e., the calendar year 2006. These evidences prove beyond doubt that Shri Somendra Khosla had the creditworthiness. He also stated that the Assessing Officer has asked the assessee to supply Permanent Account Number of Shri Khosla. He explained that Shri Khosla is a Non-Resident Indian and, therefore, he is not being assessed in India. Since he is not being assesse....
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....nomenon. The person who books the real estate gives advance against the booking without asking for any security therefor. He also submitted that the evidence in regard to creditworthiness of the creditor is of the subsequent period and not of the relevant year. Even the trade licence of Dome Services is also of subsequent period. In view of above, it is stated by the learned DR that neither the identity, creditworthiness nor the genuineness of the transaction is established by the assessee and, there- fore, the Assessing Officer rightly treated the cash credit to be unexplained. In support of this contention, he relied upon the decision of the Hon'ble Apex Court in the case of P. Mohanakala (supra). He also stated that the assessee produced the additional evidence before the ITAT, which was considered by the learned Judicial Member without allowing any opportunity to cross-examine such evidence to the Assessing Officer. Therefore, the additional evidence should not have been considered. In view of above, it is submitted by the learned DR that the order of the learned CIT(A) on this point should be sustained and question No. 1 should be answered against the assessee. 5. I have care....
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....evidence considered by the learned Members of the ITAT and then arrive at the conclusion whether the assessee is able to discharge the onus lay upon him. 6. Regarding identity : At page 28 of the assessee's paper book, there is a certificate by Shri Alliott Hadi Shahid, Chartered Accountant in which he has certified that he personally knew (sic) Mr. Somendra Khosla since 2000. He has also certified that Shri Somendra Khosla is living in Dubai since the year 2000. His main business in Dubai is development of real estate. At page 30 of the paper book, there is a Xerox copy of the passport issued by Government of United Arab Emirates. At page 32 of the paper book, there is a copy of trade licence issued by Government of Sharjah to "Dome Services" in which owners are Shri Somendra Khosla and Sahil Khosla. At page 35 there is a copy of telephone bill in the name of Shri Somendra Khosla. At page 36 of the paper book, there is a copy of electricity and water charges bill issued by Dubai Electricity and Water Authorities. At page 46 there is a health card issued by Ministry of Health, United Arab Emirates in the name of Shri Somendra Khosla. In view of the above evidences, identity of Shr....
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....for one month as per the bill issued by Dubai Electricity and Water Authority is 5287 dirhams and 1816 dirhams respectively. At page 40 of the paper book, assessee has given Xerox copy of the news published in Gulf News dated 22-1-2007, which reads as under :- "Dubai : New World Real Estate (NWRE), a regional real estate company, last year notched up sales of Dhi. 1 billion for the Living Legends project currently being developed by Saudi Arabia based Investor Tanmiyat. NWRE sold 75 villas on the golf course and 500 apartment units in the Living Legends. Tanmiyat Group is developing the Dh. 14 billion ($3.8 billion) Legends Dubailand project in association with Bahrainbased Gulf Finance House (GFH). Besides the Living Legends development at Dubailand, Tanmiyat is also developing the Commercial Heights in Dubai's Business Bay. NWRE President Somendra Khosla said : "With our exclusive network of select brokers, unparalleled service and committed team members, we have achieved this sales figure for the year 2006. We are optimistic we will be able to exceed this figure many times over for the year 2007"." Similar news published in 'Trade Arabia' is at page 41 in 'Property World' i....
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.... Bench. In the above circumstances, I have to draw inference on the basis of material already produced before the Tribunal. As per the material already on record, the sale of the real estate company of Shri Somendra Khosla in the year 2006 was Rs. 1,300 crores approximately. As per the news published in Gulf News dated 22-1-2007, Shri Somendra Khosla, President of NWRE said with our exclusive network of select brokers, unparalleled service and committed team members, we have achieved this sales figure for the year 2006. This interview was being given by Shri Somendra Khosla with reference to sale of his company NWRE of 1.1 billion Dirhams in the year 2006. From the above statement of Shri Somendra Khosla, it is evident that NWRE is an old company, which has established the network of select brokers, in preceding years it has provided satisfactory services to the customers which has given good name to the company by which the company has been able to achieve the sales target of 1.1 billion dirham (approximately 1,300 crores in Indian rupees) in the year 2006. On the above facts, it can be safely inferred that even in the preceding year, i.e., calendar year 2004 or 2005 also the comp....
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....nce furnished before the Assessing Officer. 13. I have carefully gone through all the relevant materials and find that in the correspondence furnished before the Assessing Officer, the address of Shri Somendra Khosla is given as post box No. 7805. In the licence issued by the Government of Sharjah in the name of Dome Services (FZC), the address of the company is given as post box number 7805. The name of the owners of the company as given in the licence are Shri Somendra Khosla and Sahil Khosla. Thus, it cannot be said that the address given as per the post box number 7805 before the Assessing Officer was incorrect or unverifiable address. 14. The Assessing Officer as well as the learned Accountant Member also doubted the genuineness of the transaction on the ground that in the certificate of foreign inward remittance issued by Citibank in the column of name and address of the remitter only in one certificate, the name of Shri Somendra Khosla is written. However, I find that in the other certificates, the name of the remitter is given as "Dome Services". As I have already mentioned earlier, "Dome Services" is a trading company, whose owners are Shri Somendra Khosla and Shri Sahil....
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....e appellant to have won a number of jackpots in three or four seasons not merely at one place but at three different centres, namely, Madras, Bangalore and Hyderabad appears, prima facie, to be wild and contrary to the statistical theories and experience of the frequencies and probabilities. (iii) The appellant's books do not show any drawings on race days or on the immediately preceding days for the purchase of jackpot combination tickets, which entitled sizable amounts varying generally between Rs. 2,000 and Rs. 3,000. The drawings recorded in the books cannot be co-related to the various racing events at which the appellant made the alleged winnings. (iv) While the appellant's capital account was credited with the gross amounts of race winnings, there were no debits either for expenses and purchase of tickets or for losses. (v) In view of the exceptional luck claimed to have been enjoyed by the appellant, her loss of interest in races from 1972 assumes significance." 17. On appeal by the assessee, the Hon'ble Apex Court has held as under:- "Held, dismissing the appeal, that the Settlement Commission after considering the surrounding circumstances and applying the test of human....
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....l, the High Court re-appreciated the evidence and substituted its own findings and came to the conclusion that the reasons assigned by the Tribunal were in the realm of surmise, conjecture and suspicion. 20. On appeal, to the Hon'ble Supreme Court, held, "reversing the decision of the High Court, that the findings of the Assessing Officer, the CIT(A) and the Tribunal were based on the material on record and not on any conjectures and surmises. That the money came by way of bank cheques and was paid through the process of banking transaction was not by itself of any consequence. The High Court misdirected itself and erred in disturbing the concurrent findings of fact." 21. From the above, it is evident that in the abovementioned case, the assessee has claimed to have received foreign gift from one common donor. The evidences collected by the Assessing Officer prove that the donor was to receive suitable compensation from the assessee. On the above facts, the genuineness of the gift was doubted by the Assessing Officer, CIT(A) and the Tribunal. Their view was upheld by the Hon'ble Apex Court holding that merely because money came by way of banking channel was not by itself of any c....
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....r marketing of hotel Tulip Star. The assessee also entered into a Memorandum of Understanding with M/s. Tulip Star Hotels Ltd. (TSHL) for operating the hotel Tulip Star, which was owned by THSL. During the accounting year relevant to the assessment year 2004-05, the assessee received a sum of Rs. 61,93,015 as per the agreement with THSL being 3 per cent of the gross receipt of the hotel. The same amount was paid by the assessee to TSHL, who actually operated the hotel Tulip Star. As per the agreement with TSHL, the assessee has raised debit note for reimbursement of expenses amounting to Rs. 7,56,16,910. The assessee raised debit note on the basis of monthly debit note received from CKIL for the services rendered by them to THSL. Thus, the expenditure was actually incurred by CKIL for and on behalf of the THSL and the same was paid by THSL to CKIL through the assessee. The assessee is only an intermediatory, who received the monthly bill for the expenditure incurred by CKIL and in turn raised the same on THSL. Similarly, the hotel Tulip Star was actually operated by TSHL and the operating fee at the rate of 3 per cent amounting to Rs. 61,93,015 was actually paid by THSL to TSHL thr....
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....he other hand, relied upon the order of the authorities below as well as the learned Accountant Member. He stated that the assessee has not proved any services rendered by CKIL or TSHL. Therefore, the payment of a sum of Rs. 7,56,16,910 by the assessee to CKIL and a sum of Rs. 61,93,015 to TSHL by the assessee cannot be allowed as a deduction. At page 121 of the assessee's paper book, there is a list of the employees deputed by CKIL for carrying out the duty of THSL. However, there is no evidence of actual services being rendered by them to the assessee or to THSL. He also submitted that when the assessee made the payment to CKIL or to TSHL, whether the deduction for the same is allowable or not is to be considered in the case of the assessee even if similar amount is received by the assessee from THSL. He further submitted that on the above payments made by the assessee, no TDS was made and, therefore, also the expenditure was rightly disallowed by the lower authorities. 26. In the rejoinder, it is submitted by the learned counsel that the question of disallowing of any expenditure would arise only when the expenditure is claimed by the assessee. He also submitted that so far the....
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....ure incurred by CKIL for which debit note amounting to Rs. 7,56,16,910 was raised by the assessee. When the assessee has not claimed the deduction in respect of the expenditure of Rs. 7,56,16,910, the question of disallowing the same in the case of the assessee cannot arise. 28. With regard to the operating fee of Rs. 61,93,015 is concerned, I find that the assessee received the identical amount from THSL and paid the same to TSHL. Here again, in real terms, the assessee has neither received any income nor incurred any expenditure. It entered into an agreement with THSL for operating their hotel, namely, Tulip Star. Simultaneously, the assessee entered into another agreement with THSL for operating the said hotel. The entire operating fee receivable by the assessee for operating the hotel was passed on to TSHL. Therefore, in effect, the assessee has not claimed expenditure of Rs. 61,93,015. As I have mentioned earlier that in the profit and loss account, the assessee debited total expenditure of only Rs. 86,97,337 the details of which is given in Schedule 'G' to the profit and loss account which reads as under :- "Schedule Annexed to and forming part of the accounts for the year ....