Bombay HC Dismisses Tax Appeal as Advance Room Night Receipts issue Already Settled in Earlier Years

PCIT Vs Pancard Clubs Ltd. (Bombay High Court)

The Revenue filed an appeal before the Bombay High Court challenging an order of the Income Tax Appellate Tribunal (ITAT) dated 1 September 2017 for Assessment Year 2011-12. The appeal raised two questions of law:

Whether the ITAT was justified in holding that receipts on account of advance sale of room nights were not revenue receipts, despite the assessee’s principal business being the provision of accommodation and other facilities to tourist members and despite the assessee debiting expenses related to those receipts.

Whether the ITAT was justified in holding that the provision for “Holiday Scheme Surrender Value” was an allowable expenditure.

The High Court examined the issues and found that both questions had already been decided in the assessee’s own cases for Assessment Years 2004-05, 2005-06, 2007-08, and 2009-10 through an order dated 17 February 2017 in Income Tax Appeal Nos. 1515, 1516, 1594, and 1678 of 2014. The Court further noted that the same issues were also covered by earlier decisions in the assessee’s own cases in Income Tax Appeal Nos. 2255 of 2011 and 2290 of 2011, decided on 9 May 2014.

The Revenue’s counsel fairly pointed out that the issues were already covered by these earlier judgments. The Court observed that no distinguishing features had been brought on record that would justify taking a view different from the one adopted in the earlier decisions.

In view of the binding precedents in the assessee’s own cases and the absence of any distinguishing facts, the High Court held that the questions proposed by the Revenue did not give rise to any substantial question of law.

Accordingly, the appeal filed by the Revenue was dismissed. The Court also directed that there would be no order as to costs.

Read SC Judgment in this case: SC Dismisses SLP as Advance Sale of Room Nights Issue Was Already Covered by Precedent

FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT

1. The above Appeal has been filed by the Revenue challenging the Order passed by the Income Tax Appellate Tribunal dated 1^st September 2017. Assessment Year in question is A.Y. 2011-12. According to the Revenue, the order of the ITAT gives rise to the following two substantial questions of law:

“1. Whether on the facts and in the circumstances of the case and in law, the Hon’ble ITAT was justified in holding that the receipt on account of advance sale of room nights is not a revenue receipt, without appreciating the fact that the principle business of assessee is to provide accommodation and other facilities to tourist members and assessee is debiting all the expenses relatable to these receipts ?

2. Whether on the facts and in the circumstances of the case and in law, the Hon’ble ITAT was justified in holding that provision for “Holiday Scheme Surrender Value” is an allowable expenditure ?”

2. We find that the issue raised in the present Appeal is already covered in the Assessee’s own case for A.Y.2004-05, 2005-06, 2007-08 and 2009-10 by Order dated 17^th February 2017 passed by this Court in Income Tax Appeal Nos.1515, 1516 1594 and 1678 of 2014. Additionally, we find that the issue is also covered in the Assessee’s own case in Income Tax Appeal No.2255 of 2011, and 2290 of 2011 (decided on 9^th May 2014). In fact, the learned Advocate appearing on behalf of the Revenue fairly pointed this fact out to us. Further, no distinguishing features are pointed out in the present Appeal, which would warrant a different view from that taken by this Court in its Order dated 17^th February 2017 (in Income Tax Appeal Nos.1515, 1516, 1594 and 1678, all of 2014) and the order dated 9^th May 2014 (in Income Tax Appeal Nos.2255 and 2290 of 2011).

3. In light of what is stated hereinabove, we are of the view that the questions as proposed in the above Appeal do not give rise to any substantial questions of law.

4. Consequently, the above Appeal is hereby dismissed. However, there shall be no order as to costs.

5. This order will be digitally signed by the Private Secretary/ Personal Assistant of this Court. All concerned will act on production by fax or email of a digitally signed copy of this order.