TaxTMI 
TaxTMI 
2019 (9) TMI 100
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....only. (b) The Ld. A.O. is not justified in not allowing depreciation on the other two items and C.I.T. (A) has made a mistake in directing to allow depreciation on these above two items i.e. Gaming Zone and Event Management Area. (c) Common expenses like Audit fee, Travelling & Conveyance, Interest, and Advertisement etc. (Not directly related to business or house property) those expenses have been distributed on the basis of floor area used. The Ld. A. 0. is not justified in not apportioning the expenses on prorata basis. The C. I. T. (A) has allowed depreciation on pro rata basis but is not justified in not directing to allow the common Expenses on revised proportionate area basis. Revised calculation sheet of area is enclosed. Annexure-1 (d) That the Ld. AO is not justified in calculating the rent receipt from (a) Cinema Hall, (b) Gaming Zone & (c) Event space of Rs. 1,61,21,497/- and disallowing 30% on the same of Rs. 48,36,449/- treating the same as business income and the Ld. CIT (A) is not justified in agreeing with the view of A. 0. Ground No: 2 That the Ld. A. 0. and C. I. T. (A) is not justified in not carryin....
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.... other and further ground will be argued at the time of hearing. 2. Brief facts of the case are that the the assessee is engaged in the business of real estate dealer, let out of properties, revenue sharing of cinema hall & gaming zone & mall maintenance and filed its return of income for A.Y.2011-2012 on 22.09.2011 disclosing total income of Rs.Nil, which was processed u/s.143(1) of the Act and the case was selected for scrutiny. Thereafter the Assessing Officer issued statutory notices to the assessee. In compliance to the same, the assessee submitted the details of gross profit & net profit margins with corresponding turnover as under :- Assessment Year Turnover (in lakhs) Gross Profit% Net Profit % 2011-12 26750136 -38,10,335 -2,09,54,715 2010-11 5959940 61.94 123.61 2009-10 685900 60 73 On examination of evidences submitted by the assessee, ,the Assessing Officer completed the assessment assessing total income of the assessee at Rs. 71,99,230/- and made addition of Rs. 4,49,867/- on account of inadmissible electricity expenses, Rs. 19,12,911/- on account of inadmissible depreciation and Rs. 48,36,449/- on account of income ....
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....onsistency raised by the assessee has observed that it must be borne on mind that it has been held in a catena of judgements that principles of res judicata are not applicable to income tax proceedings and that each year has to be treated as such. For this reason, the CIT(A) has relied on the decision of Hon'ble Supreme Court in the case of Radhasoami Satsang v CIT [1992] 193 ITR 321. Now, coming to the issue of rent receipt treated by the Assessing Officer as business receipts instead of House Property income and thereby disallowing 30% of standard deduction, the CIT(A) relying on the various judicial decisions has observed as under :- "[8.22 Keeping the above principles in mind, the facts as stated by the appellant need to be analysed which are stated at para-7.13(3) (a to g). The agreement that the appellant had entered into with Stargaze Cinema was not a fixed income which the appellant expected. As pointed out by the Ld. Assessing Officer, the appellant was entitled to 12% of Net Monthly Revenue if the occupancy level achieved was less than 35% calculated on an average of 5 shows per day or 17% of Net Monthly Revenue if the occupancy level achieved was 35% or more ....
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....d licence to run a cinema. Apart, the appellant also provided areas for vending food and other items. [8.25 At this juncture it would be relevant to discuss the judgement of the Hon'ble SC rendered in the case of CIT v National Storage (P) Ltd. [ 1967J 66 ITR 596 (SC). The facts in this case were that the assessee was promoted due to promulgation of the Cinematograph film Rules. 1948, by the Government. The rules required the distributor to store films only in godowns constructed strict!) in conformity with the specifications laid down in the Film Rules and in a place to be approved by the Chief Inspector of Explosives. The assessee purchased a plot of land and had constructed 13 units. Each unit was divided into four vaults. The ground floor of vaults was utilised to rewind the films and upper floor for the storage of films. The units were constructed in conformity with the requirements of and the specifications laid down in the film Rules. The key to each vault was retained by the vault holder but the Key to the entrance was kept in the exclusive possession of the assessee. A fire alarm was installed and an annual amount was paid to the mun....
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....es. These have to be built as per specifications stated in the Jharkhand Cinemas (Regulation) Act, 2000. It includes both safety norms for evacuation in case of emergency. The Uphaar cinema tragedy is a case in point. Apart, from the building specification, there has to be fire safety-' audit done of the cinema and only if the arrangements are found to be satisfactory, the fire safety department allows the theatre to run. As was the fact in the case of National Storage (supra), the appellant also provided other amenities like space for food court etc. [8,27] In the agreement with Stargaze the appellant was entitled to a minimum amount but. on the other hand, the outer limit was based on the occupancy levels achieved by Stargaze. Further, Stargaze was required to provide detailed account of day to day revenue from sale of tickets, concessional sale and any other revenue to the appellant on a monthly basis. The appellant also had the right to verify the accounts, with prior notice to Stargaze. These facts show that the receipts had the character of business income. For this proposition reliance is place on Chennai Properties & Investments Ltd. v. C1T (2....
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....on on assets (on pro rata basis) 3. common expenses (on pro rata basis) 4. carry forward of business and depreciation losses [8.31] As regards Points No.1 to 3 above, the Ld. Assessing Officer shall calculate the depreciation on the area occupied by Stargaze and allow depreciation on building at the rates applicable. Similar exercise may be done for depreciation on assets (now held to be business assets) and other common expenses (now to be held as business expenses) after ascertaining their linkage with the running of the cinema hall. As regards the issue of carry forward of depreciation and business loss, it is held that no such claim has been made by the appellant and therefore, no such determination has been made in the past in terms of the provisions of section 32 (2) and 72. No claim at this stage can be adjudicated in terms of the ratio of the judgement of the Apex Court in the case of Goetze (India) Ltd. v CIT 284 ITR 323 (SC) which held that appellant-assessee cannot make a claim for deduction other than by filing a revised return." On careful perusal of the above observations of the CIT(A), we do not see any good reason to interfere with the ....