Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2021 (3) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (3) TMI 831 - AT - Income TaxDisallowance of huge business expenditure - onus to prove - no business operation for the year under consideration - there is no nexus between expenditure debited into profit & loss account and business operation of the assessee thus disallowed entire expenditure - HELD THAT:- In order to allow deduction for any expenditure, the assessee should prove the nexus between expenditure incurred and debited into profit & loss account and business operations of the assessee. Further, assessee also needs to prove that expenditure has been wholly and exclusively incurred for the purpose of business. In this case, on perusal of details filed by the assessee, we find that although assessee has debited huge expenditure under various heads of expenditure, but failed to file any evidences to prove that there is a nexus between expenditure debited into profit & loss account and business operations of the assessee. Therefore, it is a well settled principle of law that whether or not any revenue from operations normally overhead expenditure incurred for maintaining corporate status of the assessee needs to be allowed. To ascertain the fact with regard to nature of expenditure and necessity of incurring such expenditure with reference to business operations of the assessee, the evidences needs to be examined by the AO. Therefore, to verify the claim of the assessee that there is a nexus between expenditure debited into profit & loss account and business operations, the issue has been set aside to the file of the AO with a direction to the AO to reconsider the explanation furnished by the assessee along with necessary evidences. In case, the AO finds that the expenditure debited into profit & loss account are necessary to incur for maintaining corporate status of the assessee, then the expenditure incurred by the assessee needs to be allowed irrespective of the fact that there is no revenue from operations. Appeal filed by the assessee is allowed for statistical purposes.
|