IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH: KOLKATA
[Before Sri Mahavir Singh, JM & Shri C. D. Rao, AM]
I.T.A Nos. 1545 & 1546/Kol/2011
Assessment Years: 2003-04 & 2004-05
Income-tax Officer, Wd-7(1), Kolkata.
(Appellant)
Vs.
Happy Home & Hotels Pvt. Ltd.
(PAN: AAACH 7373 L)
(Respondent)
Date of hearing: 15.03.2012
Date of pronouncement: 23.03.2012
For the revenue: Shri D. J. Mehta
For the Respondent: None
ORDER
Per Mahavir Singh, JM
These appeals by revenue are arising out of separate orders of CIT(A), VIII, Kolkata in Appeal Nos.196/CIT(A)-VIII/Kol/10-11 and 411/CIT(A)-VIII/Kol/09-10 dated 08.08.2011. Assessments were framed by ITO, Wd-7(1), Kolkata u/s.144/147 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for Assessment Year 2003-04 and u/s. 147/143(3) of the Act for Assessment Years 2004-05 vide his separate orders dated 24.12.2010 and 29.12.2009 respectively.
2. The only common issue in these two appeals of revenue is against the order of CIT(A) deleting the disallowance made by Assessing Officer on account of licence fee payable at Rs.9 lacs in each of the years and not treating the same u/s. 43B of the Act.
3. We have hard rival submissions and gone through facts and circumstances of the case. Brief facts are that the assessee took land at
4. During the relevant assessment years, assessee collected licence fee, which was disclosed in its books of accounts and credited to P&L Account under the head “other incomes”. This sum of licence fee was recorded under the head revenue because assessee appropriated its income as it is not required to pass on to KMC. According to assessee, under the licence agreement dated 15.02.1985 with KMC, assessee had taken this space in Satyanarayan Park, air condition market on licence for a period of 30 years with the right to sub licence or sublet to other tenants. Under the terms and conditions of the aforesaid agreement, it is stipulated to pay rent by way of licence fee to KMC amounting to Rs. 9 lacs for each of the year. The assessee claimed this amount payable to KMC in the P&L Account as deduction. According to assessee, this agreement with KMC, the assessee is a tenant and KMC is landlord. According to assessee, this licence fee is essentially in the nature of rent payable to KMC as licence fee but in the nature of rent. According to assessee, this payment is purely a contractual obligation arising out of purely contractual relations in view of licence agreement dated 15.02.1985 entered into by and between assessee and KMC. The assessee in its appreciation of legal position took this payment outside the purview of section 43B of the Act as this is not a payment falling under any statute or there is no statutory obligation as provided in the provisions of section 43B of the Act. It was the contention of the assessee that the relation between assessee and KMC is that of landlord-licencee/tenant. In execution of the aforesaid licence agreement, which is analogous to a contract between the parties, the payment of licence fee in the nature of rent is not a statutory levy but an ordinarily quid pro quo. We find that the CIT(A) relying on the decision of Hon’ble Calcutta High Court in the case of Varas International Pvt. Ltd. (supra) allowed the claim of assessee, wherein Hon’ble Calcutta High Court held that the fee or charges received by the Government for parting with its exclusive right to manufacture or vend intoxicants is neither a tax nor a duty nor a fee nor a cess. Here in the present case, the KMC’s exclusive right to built market and let out to shop owners on licence basis under licence agreement dated 15.02.1985 is not a fee as prescribed u/s. 43B of the Act. Since in assessee’s other years i.e. Assessment Years 1997-98 and 1998-99 the department has accepted the decision treating the fee as rent, we applying the principle of consistency confirm the order of CIT (A). This issue of revenue’s appeal is dismissed.
5. In the result, appeals of revenue are dismissed.
6. Order pronounced in open court on 23.03.2012.
Sd/- Sd/-
(C. D. Rao) (Mahavir Singh)
Accountant Member Judicial Member
Dated:
Jd. (Sr.P.S.)
Copy of the order forwarded to:
1. APPELLANT – ITO, Ward-7(1), Kolkata.
2 Respondent – Happy Home & Hotels Pvt. Ltd., 11,
3. The CIT (A), Kolkata
4. CIT, Kolkata
5. DR, Kolkata Benches, Kolkata
True Copy,
By order,
Asstt. Registrar.