Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2013 (7) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2013 (7) TMI 732 - AT - Income TaxExistence of business activity - Whether assessee is having business activity or not pending cancellation of the license due to the orders of the suspension granted by SEBI in the interim period – held that temporary suspension of business can not be taken as closure of business and necessary expenditure was allowed – court followed the principle thereon direct the AO to allow loss which is reduction in value of shares held as stock in trade. TDS u/s 194J - Whether the disallowance u/s 40(a)(ia) valid - the issue of disallowing amount being legal fees paid to advocate u/s 40(a)(ia) - the AO and the CIT(A) erred in mixing up the facts - As far as fees there was TDS which was paid belatedly - Even though AO mentioned the same he did not disallow the amount - Only disallowance in the order is of the amount paid to advocate on which provisions of sec. 194J are not applicable as the amount was less than the limit - Provision of section 40(a)(ia) cannot be applied to amount paid to the advocate as there was no need to make TDS on that amount under the provisions - AO to allow the deduction. Cessation of liability - Writing off Income from other sources - treatment of interest income as 'income from other sources' – The amount was written back to P/L Account under provisions of sec.41(1) – the AO and the CIT(A) treated the same as other income - Even though there is no details filed with reference to amount written back, it was the contention that write back of business liability provided in earlier years was considered as income under section 41(1), which falls under the head business - the amount has to be considered as business income as the amount was written back u/s 41(1) - to that extent the orders of the AO and the CIT(A) was modified. Nature of loss - Treating the business loss as speculation loss by invoking provisions of Explanation-2 to sec.73 - assessee is entitled to claim business loss - income from business. Assessee is entitled set off net business loss if any - Explanation to section 73 does not apply to the facts as there are no purchases and sale of shares during year and loss is of reduction in valuation of closing stock. Expenses claim - expenses claimed by the assessee were not allowed on the ground that the assessee has not carried out any business activity during the year there by not allowing carry forward of loss - Since the expenses were incurred in connection with the business activity to keep business alive, to the extent of business loss determined during the year is to be carried forward for setting off if any in later years – decided in favour of assessee.
|