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2022 (4) TMI 393 - AT - Income TaxRevision u/s 263 - disallowance of expenses - as per CIT AO had erroneously disallowed only certain expenses, viz. manufacturing expenses, consultancy charges, travelling expenses, professional fees, selling expenses, interest paid to bank and others and bank commission, and had failed to disallow the remaining expenses on Interest on unsecured loans, Brokerage charges on unsecured loans and Processing charges - CIT was of the view that the failure on the part of the A.O to disallow the aforesaid balance expenses had rendered his order erroneous in so far as it was prejudicial to the interest of the revenue - HELD THAT:- CIT had proceeded with absolutely on the basis of misconceived facts. The very basis for the Pr. CIT to infer that the assessee company was not carrying out any actual business and was only involved in paper transactions and accommodation entries is absolutely incorrect and fallacious. In fact, we may herein observe, that the reference to paper transactions of the assessee by the Assessing Officer was in the context of the fact that the assessee was carrying out coal trading transactions which were non-delivery based i.e. no physical delivery of the commodity was therein involved. AO on the basis of his aforesaid observations that the assessee was engaged in the business of coal trading transactions which were non-delivery based i.e. trading on spot delivery basis, had thus, for the said reason concluded that the assessee’s claim for deduction of expenses were to be restricted only to those which were related to non-delivery transactions or paper transactions. Pr. CIT had construed the paper transactions of the assessee as if no actual business was being carried out by it. In our considered view, not only the basis adopted by the Pr. CIT is found to be fallacious, but also, the same is not consistent with the past history of the assessee. As brought to our notice by the Ld. AR, the AO while framing assessment in the assessee’s own case for the immediately preceding year i.e, assessment year 2010-11, had observed, that the assessee’s claim for deduction of the expenses was to be restricted to only those expenses which were related to non-delivery based transactions or paper transactions and had allowed those expenses which were genuinely incurred to carry out such transactions. AO had after deliberating at length arrived at a plausible view i.e., allowing of the assessee’s claim for deduction of expenses to the extent the same were genuinely incurred in the course of its coal trading transactions on a non-delivery basis. In sum and substance, the Assessing Officer had after due application of mind restricted the assessee’s claim for deduction to only those expenses which were related to its non-delivery based transactions or paper transactions. Apart from that, the view so taken by the Assessing Officer is found to be in conformity with that taken in the assessee’s own case for the assessment year 2010-11 [2019 (3) TMI 1966 - ITAT NAGPUR] Pr.CIT had approached the issue in question absolutely on the basis of misconceived and incorrect facts i.e., by construing the term non-delivery based transactions or paper transactions as if no actual business was done by the assessee. Also, as observed by us hereinabove, the view taken by the Assessing Officer i.e, allowing of the assessee’s claim for deduction of certain expenses that were genuinely incurred in the course of its non-delivery based coal trading transactions is in conformity with the order passed by the Tribunal in the assessee’s own case for the immediately preceding year - Decided in favour of assessee.
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