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TMI Blog2015 (6) TMI 756X X X X Extracts X X X X X X X X Extracts X X X X ..... General Expenses Rs.52,866/- e) Directors sitting fees Rs.3,500/- Rs. 24,02,571/- 2. The learned Commissioner of Income-tax (A) failed to appreciate that assessee being a corporate entity, it has to incur certain expenditure for the day to day functioning of the company which are allowable expenditure u/s. 37 of the Act. 3. On the facts and circumstances of the case and in law, the learned CIT(A) erred in upholding the findings of the learned Assessing officer in not allowing setoff of brought forward unabsorbed business loss and depreciation against the assessed income. 4. The Appellant craves leave to add, amend, alter or delete any or all the above grounds of appeal. Vide its application dated 04.04.2014, the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mad to its income. In its reply, dated 12.10.2008,the assesse replied that it was engaged in the business of investing, leasing and financing, that it was incorporated with the objective of investing and financing since June,1992,that since then it had carried on the said business, that receipt and payment of interest was an ordinary activity conducting in the normal course of business, that the interest receipt should not considered separately, that it made an application for registration to Reserve Bank of India(RBI)to register it as NBFC, that the net owned funds of the assessee were below the prescribed minimum level, that because of that it could not get registration as NBFC, that it continued to carry on business, that it did not acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lanation to sec.37(1) dealt with the expenses incurred for any purpose which was an offense or was prohibited by law, that payment of interest, audit, professional fee, general expenses could by no means be said to be expenditure for any purposes which was an offense or prohibited by law, that the disallowance of expenditure amounting to Rs. 213.66 lacs was not justified. Without prejudice to above it was argued that in case the AO held the assessee was carrying on illegal business then the net income of such business was required to be computed under the head profits and gains from business and profession, that by no stretch of imagination such income could be assessed under the residuary type, that AO should have allowed interest expendit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso concurred with the AO in disallowing expenditure form the interest. He also held that no business loss/depreciation could be allowed to be set off against income from other sources. Finally, he dismissed the appeal by the assessee. 4. Before us, Authorised Represetative (AR)contended that the assessee was carrying out business activities, that it had disallowed interest amounting to Rs. 76.09 lacs, that it had incurred the expenses for running business and maintaining the corporate entity, that it had shown the income to the extent of income earned, that the RBI had rejected the application of the assessee as it was not having sufficient own fund, the denial by the RBI would not turn the business of the assessee in to an illegal busine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t that does not mean that the systematic organized activity carried out by the assessee for earning profit would not be treated as business. The explanation to sec.37(1) of the Act is not at all applicable to the case under consideration. In the scrutiny assessment, completed in the earlier years, the AO had assessed the interest income as business income and had allowed all the expenditure related with the business activity. The rule of consistency demands that for deviating from the stand taken in the earlier AY. ,the AO should bring on record the distinguishing feature of that particular year. We find that the AO or the FAA has not mentioned even a single line as to how the facts of the case under appeal were different from the facts of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hire charges and commission income. The AO was of the opinion that the rental income received while letting out the properties was chargeable to tax under the head income from house property, that the hire charges and commission income were chargeable to tax under the head income from other sources,that brought forward business losses were not permitted to be set off u/s.72(1) of the Act. When the matter reached to the Hon'ble High Court it held as under : Income against which brought forward loss is claimed to be set off should represent business income judged by application of commercial principles and not on application of provisions of Act. Following the above,Ground No.3 is decided in favour of the assessee. As we have decided origi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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