2012 (7) TMI 268 - AT - Income Tax

Disallowance of expenditure there was no business activity - Held that:- As both the revenue authorities had restricted their thought process in the “manufacturing activity and sales” whereas from the details in Statement of Facts supplied by assessee and schedules as appended along with the Balance Sheet, it is found that not only the assessee had received advances from its customers, but had also paid advances to its sub contractors, which goes to prove that there was some movement in business, if not full business activity - though there was no manufacturing and sales activity, but there certainly was some “business activity” - the revenue authorities were incorrect in disallowing the claim of expenses and depreciation - decided in favour of assessee.