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2009 (5) TMI 840 - ITAT MUMBAIDisallowance of depreciation - membership rights of the BSE card - office equipments and various other expenses claimed on account of interest paid to bank and others and operational expenses - No business activity - SEBI instructions not to operate business and also cancelled the registration - involved in share scam - Meaning of ''Discontinuation'' - CIT(A) has also confirmed the action of AO - HELD THAT:- The establishments of the assessee were intact and they were to be maintained. Staff members were kept and salaries were paid to them. Loans taken from various banks and others for the purpose of business activity in the past were outstanding during the year under consideration therefore, any interest, accrued was to be paid during the year under consideration or was payable. The assessee is having a valid BSE card which could not be used for the reason that the SEBI has passed an order barring the assessee not to do any business activity. Therefore, it also cannot be said that the assessee could not use the BSE card on its own which was ready to use. In these circumstances, we are of the considered view that the assessee's business does not come to an end or discontinued. The meaning of discontinuation is explained in the Law Lexicon where "it implies a voluntary act and abandonment of possession followed by the actual possession of another, it implies that the person discontinuing has given up the lend and left it to the possessed by anyone choosing to come in as held in the case of Qadir Bux v. Ramchand,[1969 (3) TMI 88 - ALLAHABAD HIGH COURT]. It is further explained at the same page at 563 of the Law Lexicon that "discontinue ; to cause to cease or to put a stop" . Neither is the business discontinued on account of voluntary act of the assessee nor has the same put to stop on its own. The business could not be done for the reason that the SEBI has barred the assessee not to do any business activity till further orders. The assessee was barred till further orders clearly means that the assessee was not barred permanently. The permanent order issued in the year 2007 and from the year of 2007, the assessee cannot do any business activity therefore, at the most it can be said that no expenses can be allowed from that year. However, for the earlier year, in our considered view, the expenses incurred by the assessee for the purpose of its business activity are allowable as the establishment was not scrapped and the assessee was still hopeful to start its business activity. In the present case, no such facts are involved as all the expenses incurred were in connection with the business activity only and for keeping the business alive, to maintain its business establishment and to meet the obligation of interest on loan, etc., taken for its business activity therefore, we hold that various expenses incurred by the assessee are allowable as deduction. However, admissibility of the expenditure was not examined by AO for the reason that he has disallowed the expenditure on the ground that they are not allowable as the assessee has not done any business activity. Therefore, for the purpose of examining the admissibility/ genuineness of these expenses, the matter is sent to the file of the AO. The assessee has contended that depreciation and interest have been allowed by the Tribunal as allowable while passing order for the AY 2000-01. AO will take into consideration the order of the Tribunal and if it is found that facts are similar then of course, in view of the decision of the Tribunal, the claim of the assessee on account of depreciation and interest has to be allowed. Regarding the remaining expenses, AO will examine the admissibility as stated above, after allowing opportunity of being heard to the assessee. We order accordingly. In the result, the appeals of the assessee are allowed for statistical purpose.
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