HOTEL & ALLIED 12-13_compressed

Appeal Overview

  • Form No: 35

  • Date of Submission: 22 APR 2015

  • Appellant: M/s. Hotel & Allied Trades (P) Ltd.

    • Address: Casino Hotel, W/Island, Cochin - 3

    • PAN: AAACH6770P

  • Assessment Year: 2012-13

  • Assessing Officer: Assistant Commissioner of Income Tax

    • Designation: Corporate Circle 1(2) Kochi

  • Order Date: 20.03.2015

  • Appeal Under: Section 246 A of Income-tax Act, 1961

Payment Summary

  • Tax Deducted at Source (TDS): Rs. 1,62,365.00

  • Notice of Demand Date: 28/03/2015

Relief Requested

  • Relief Claimed: As per grounds of appeal

Previous Appeals

  • Pending Appeals: Yes, with Commissioner (Appeals) Kochi for assessment years 2008-09 to 2011-12.

    • Details:

      • 2008-09: Assessing Officer - Assistant Commissioner of Income Tax Circle -1(2), Kochi, Order Dated: 24-12-2010

      • 2009-10: Additional Commissioner of Income Tax, Range -1, Kochi, Order Dated: 14-12-2011

      • 2010-11: Additional Commissioner of Income Tax, Range -1, Kochi, Order Dated: 20-03-2013

      • 2011-12: Assistant Commissioner of Income Tax, Circle -1(2), Kochi, Order Dated: 20-02-2014

Appellant's Details

  • Represented By: M/s. Kaimal & Co., Chartered Accountants

    • Address: VIII/1365, T.D. East Road, Cochin - 682002

    • Email: kaimalco@gmail.com

  • Managing Director: Jose Dominic

Verification Statement

  • Declaration: Information provided is true to the best of the appellant's information and belief.

  • Date: 13-04-2015

  • Place: Cochin

Statement of Facts

  • Business Type: Domestic company engaged in hotel and resort operations.

  • Initial Return Filed: 29.09.2012, reporting a loss of Rs. 1,52,45,224/-

  • Revised Return: 31.03.2014, recalibrating the loss to Rs. 2,00,15,848/-

  • Assessment Completed: Under section 143(3) as of 20.03.2015, assessing loss of Rs. 95,45,508/- (no tax demand)

Additions/Disallowances by Assessing Officer

  1. Disallowance of interest for alleged diversion of funds: Rs. 39,62,621

  2. Disallowance of interest under section 14A: Rs. 17,26,261

  3. Disallowance of interest on capital work-in-progress: Rs. 8,27,441

  4. Disallowance of foreign ad expense: Rs. 26,79,017 (due to non-TDS)

  5. Disallowance of subsidy-related depreciation: Rs. 12,75,000

Grounds of Appeal

General Grounds

  1. Legal/Factually Flawed: The Assessing Officer's order is inconsistent with the case's facts.

Specific Issues

  1. Interest Disallowance Issues:

    • Lack of justification for disallowance of Rs. 39,62,621 for alleged fund diversion.

    • Sufficient non-interest bearing funds were available with the appellant.

    • Loans to sister concerns were business-related, not diversionary.

  2. Section 14A Disallowances:

    • Rs. 17,26,261 disallowed without clear basis for expenditures.

    • Expenditure on investments in subsidiaries does not attract section 14A.

  3. Capital Work-in-Progress Interest:

    • Interest disallowed despite being related to expansion projects.

  4. Depreciation Concerns:

    • Disallowed depreciation needs reassessment based on the subsidy received.

    • Apparent errors regarding the capital allowance computation.

Interest on Borrowers' Funds Usage

  • Assessing officer claims interest bearing funds were misdirected to sister concerns without appropriate compensation.

  • Previous court rulings are referenced to support claim of commercial expediency.

Advertisement Payment Details

  • Payment of Rs. 26.79.017/- to foreign entity with unfulfilled tax deductibility obligations.

  • Circumstances surround the validity of remuneration led to additional tax obligations due to rerouting previous circulars.

Conclusion

  • Total income summarized contributions from all disallowed completed assessments to arrive at the final assessed loss of Rs. 95,45,508/-.

  • Assessing officer proposed penalties pending consideration.

  • Final Assessment Completed: Under section 143(3) I.T. Act, 1961.