TMI Blog2014 (1) TMI 876X X X X Extracts X X X X X X X X Extracts X X X X ..... and made disallowance of the said expenses on the basis of this misconception without considering or examining the said claim on merit being the claim for regular business expenses of post survey period against regular business income – order set aside and the matter remitted back to the AO for fresh adjudication with a direction to consider and allow the claim of the assessee for the expenses as regular business expenses – Decided in favour of Assessee. Set off of brought forward business loss and unabsorbed depreciation – Application made u/s 154 of the Act – Held that:- The claim of the assessee for set off of brought forward loss and unabsorbed depreciation was not considered at all by the AO while framing the assessment - Since the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... round recorded in the documents. In the return of income filed for the year under consideration on 31.10.2007, business profit, however was shown by the assessee at Rs.1,48,90,910/- and after claiming set off of brought forward losses and unabsorbed depreciation, total income of Rs.72,70,721/- was declared by the assessee. 4. During the course of assessment proceedings the difference between business profit of Rs.1,57,00,000/- agreed during the course of survey and the business profit of Rs.1,48,90,910/- as declared in the return of income was explained by the assessee as on account of expenses incurred during the post survey period. The Assessing Officer did not accept this explanation of the assessee and disallowed the deduction claimed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h WIP in construction outside the books. Question of allowing further expenses does not arise at all because after considering the expenses incurred the director of the assessee company disclosed the additional income". The Assessing Officer accordingly assessed the business profit of the assessee at Rs.1,57,00,000/- relying on the statement of the director of the assessee-company made during the course of survey and completed the assessment on that income without considering the claim of the assessee for set off of brought forward losses and unabsorbed depreciation. 5. Aggrieved by the order of the AO, an appeal was preferred by the assessee before the ld. CIT(A), who confirmed the disallowance made by the AO on account of expenses of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een offered for taxation is net i.e. after the accounting for all relevant expenses of the current year which the director was well aware of while disclosing the income of Rs.1,57,00,000/- lacs which was in addition to the regular profit as per books of account amounting to Rs.15 lacs. A.O. further noted that the declaration made by the assessee was on account of unaccounted WIP which means that the assessee has made such WIP outside the books. Before me it was submitted that there is nothing in the statement of the director that the appellant had regular business expenses in arriving at quantum of the director that the appellant had regular business expenses in arriving at quantum of additional income. However, I do not agree with his argu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and accordingly in my opinion this is the accounting jugglery only with a view to reduce the taxable income offered in survey which is not permissible as per law. In view of these facts and legal position I am of the considered opinion that the A.O. was justified in ignoring the claim of appellant regarding expenses claimed which is upheld." 6. We have heard the arguments of both sides and also perused the relevant material on record. The ld. Counsel for the assessee has invited out attention to the statement of estimated profit prepared for the purpose of advance tax as on 15.03.2007 given on page no. 73 of his paper-book to show above the basis of the said estimate. In the said statement, profit as per trial balance was taken at 1.58, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lar business income which was estimated at Rs.1,42,00,000/- as on 15.03.2007 for advance tax purpose to that extent. It appears that the AO and the ld. CIT(A), however, misconceived the claim of the assessee for the said expenses as that of against the additional income of Rs.15,00,000/- declared during the course of survey and made disallowance of the said expenses on the basis of this misconception without considering or examining the said claim on merit being the claim for regular business expenses of post survey period against regular business income. We, therefore, set-aside their orders on this issue and restore the matter to the file of the AO with a direction to consider and allow the claim of the assessee for the impugned expenses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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