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2019 (5) TMI 16 - ITAT MUMBAIDisallowance of expenditure as rent, salaries to staff & misc. expenses - assessee only produced self-made vouchers and could not provide the source of payment - FAA confirming the same, enhanced the same by disallowing depreciation in view of the fact that no business activity was being carried out by the assessee during impugned AY. - HELD THAT:- These expenditures are in the nature of audit fees, bank charges, salaries to two employees and rent paid by the assessee. These expenses, in our opinion, were necessary routine expenditure so as to maintain the corporate personality of the assessee. So far as the source of the same is concerned, it is found that books of accounts were duly audited and the assessee was having closing cash balance. Therefore, there could be no justifiable reason to disallow the same. Similarly, the disallowance of depreciation was not justified since the business had not closed down and the block of asset continue to exist in the books. Therefore, by deleting both these additions, grounds of assessee allowed. Addition of Sundry Creditors - Disallowance made for want of proper explanation - cessation of liability - HELD THAT:- We find that new liabilities incurred during the year represent audit fees payable to auditors, outstanding staff salary & professional tax. These are current liabilities and nothing on record suggest that these liabilities have ceased to exist. The stand of lower authorities, therefore, could not be sustained to that extent. The amount represent amount due towards one of the directors of assessee company. The assessee had already filed confirmation of the concerned director. It is noted that the assessee has received further sum of ₹ 1.20 Lacs from the said director during the year which was added to the income of the assessee. However, the same has already been deleted by FAA upon finding that the assessee fulfilled the onus of providing identity, genuineness and creditworthiness of the said director. Nothing on record suggest that the liability of the assessee company has ceased to exist and therefore, no addition would be warranted on this account. The amount shown to be due against M/s Raghav Corporation has been confirmed by the said party as evident from paper-book. Therefore, the addition to that extent could also not be sustained. - Decided in favour of assessee
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