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2015 (2) TMI 13 - AT - Income TaxDisallowance of expenses and depreciation - assessee company has not only carrying out its business activities past 7-8 years but also not carried out any business activities in future 2-3 years - Ld. CIT(A) after examining all the expenses has restricted the disallowance to the tune of ₹ 8,68,705/- and given the relief of ₹ 18,35,634/- out of the total disallowance of ₹ 27,04,339/- - Held that:- Keeping in view the details of salaries paid to the employees of the assessee company, we find that Ld. CIT(A) has allowed the entire salary expenses to the assessee in the impugned order which is not permissible under the facts and circumstances of the present case, because the assessee company is not carrying out its business activities since past 7-8 years and also not carry out for subsequent 2-3 years amount to ₹ 6,42,432/- has wrongly been allowed by the Ld. CIT(A). After examining the same, we are of the view that under the facts and circumstances of the case and to keep the corporate status alive, minimum expenses on account of salary should be allowed to the assessee. Therefore, we allow the salary of one Account Assistant amounting to ₹ 87000/-; Computer Operator ₹ 73,367/-; Driver ₹ 49,400/-; Peon ₹ 38,400/- and salary of one CA ₹ 24,000/- only and salary for others claimed by the assessee and the other expenses are disallowed. AO is directed to recompute the income of the assessee, as per the directions given as aforesaid. - Decided in partly in favour of assessee. Services charges - assessed under the head “income from other sources” OR "profit and gains from business and profession" - Held that:- receipts by way of service charges does not form a continuous and systematic course of activity for the appellant. Some stray "referrals" in the case of its own directors and their relatives (for example director's son Sh. R. Malhotra and couple of business associates) resulted in booking of tickets through Span Excursions Pvt Ltd. Against that purchase, a few thousand by way of service charges has been received during the year. The income, therefore, was more of a casual nature. Keeping in view of the facts noted by the Ld. CIT(A) we are in agreement with his findings that there was no business income earned during the year and the amounts received in the form of credit notes were primarily casual in nature. Thus, they were rightly assessed under the head “income from other sources" - Decided against assessee. Expenditure on account of electricity and water charges, watch and ward charges, traveling expenses and Director’s remuneration, correctly diallowed by CIT(A) - Decided against assessee. Entitlment for deduction of expenses u/s. 30 to 37 - Held that:- AO has wrongly held that the assessee can claim expenses to the extent of business receipts only. Whereas the assessee is entitled to claim expenses covered under section 37 of the I.T. Act, therefore, direction is issue to the AO to reexamine the expenses and allow the same in view of the provisions of section 37 of the I.T. Act. - Decided in favour of assessee for statistical purposes.
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