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2015 (8) TMI 359 - AT - Income TaxDisallowance of expenditure u/s 14A - disallowance of claim of loss as the entire expenditure was directly attributable to earning of exempt income - Held that:- In facts prevailing in the instant case, we are of the view that the assessee should be considered to have been set up its business on the date of its incorporation and hence the expenses incurred after that date should be allowed as revenue expenditure. The view taken by the tax authorities that the first MOU was entered in the succeeding year should be considered as date of setting up of business is not in accordance with the settled principles discussed above. Accordingly we set aside the order of Ld CIT(A). As noticed the assessing officer did not have occasion to examine the expenditure claim put forth by the assessee, since he had treated all the expenses as 'prior period expenditure'. Since we have reversed the view taken by the assessing officer, we are of the view that all the expenditure claimed by the assessee need to be examined at the end of the assessing officer. Accordingly, while holding that the assessee's business can be considered to have been set up on the date of incorporation and hence the expenditure incurred after that date is allowable as revenue expenditure in the facts and circumstances of this case, we restore the matter of examining the expenditure claim to the file of the assessing officer with the direction to examine them after affording necessary opportunity of being heard to the assessee and take appropriate decision in accordance with the law. In view of the above, we are unable to agree with the view of the tax authorities that all the expenses should be considered as having been incurred for earning the exempted dividend income. Accordingly, we reverse the order of Ld CIT(A) on that issue also and restore the same to the file of the AO, who directed to examine the applicability of the provisions of sec. 14A of the Act also afresh. - Decided in favour of assessee for statistical purposes.
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