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2015 (6) TMI 898 - ITAT DELHI

2015 (6) TMI 898 - ITAT DELHI - TMI - Disallowance of business expenses - CIT(A) allowed claim - Held that:- When the assessee company was neither dissolved nor was its business closed, the Revenue Authorities were unjustified to disallow the expenses claimed by the assessee. As per revenue record, the assessee company started its business in the year 1997 and has done its business but in the year 1999-00 and in the current year, it had suffered recession and the company could not procure export .....

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d by the Assessing Officer on the basis that it had not manufactured any product and not traded in any item and it had only earned income from interest on FDR. Thus CIT(Appeals) was justified in allowing the claimed expenditure which were disallowed by the Assessing Officer based on a wrong view. We are thus not inclined to interfere with the findings of the Learned CIT(Appeals) in this regard. The same is upheld. - Decided against revenue. - ITA Nos. 4963/Del/2012 & 2054/Del/2013 - Dated:- 23-4 .....

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it and loss account because: i) the assessee has not carried out any business activities during the year under consideration. ii) The assessee has not carried out any business activity since 1996-97; iii) Even in the later year no business activity has been carried out by the assessee. iv) i), ii) & iii) above prove that the assessee has no intention to resume its business activity and the assessee has stopped the business for good from 1996-97. 2. Heard and considered the arguments advanced .....

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ncome filed. As per profit and loss account, no sale or purchase had been made during the year by the assessee. Vide letter dated 27.9.2010, the assessee submitted that it had not manufactured any product and not traded in any item and that it had only earned income from interest on FDR during the year. The Assessing Officer was of the view that since no business activity was carried out during the year, the question of computation of business income did not arise. He, therefore, ignored the los .....

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carried out and income from interest on bank FDR amounting to ₹ 6,923 was assessed as income from other sources. The Learned CIT(Appeals) has allowed the claimed expenses against which the Revenue is in appeal. 4. In support of the ground, the Learned Sr. DR reiterated the contents of the assessment order wherein the Assessing Officer has noted that during the years under consideration, the assessee company had not manufactured any product and not traded in any item and had earned interes .....

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e, the assessee was not waiting for proper market conditions instead the factory was closed for the last so many years. 5. The Learned AR on the other hand placed reliance on the First Appellate Order and reiterated the decisions cited before the Learned CIT(Appeals) including the decision of Delhi Bench of the ITAT in the case of DCIT vs. Fortune Garments Ltd. (2011) - 7 ITR (Tribunal) 243 (Del.). 6. Considering the above submissions, we find that the assessee was engaged in manufacturing of bl .....

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requirements. The whole cause of action of disallowance of expenses by the Assessing Officer was in the background of his observations that the assessee did not carry out any business transaction. The contention of the assessee on the other hand remained that carrying on business activity in a particular period cannot be equated with closure of business. Reliance was placed on several decisions including the decision in the cases of P.C. Bhandari & Co. Ltd. vs. ACIT (supra) and CIT vs. Anit .....

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s after due verification of books of account and relevant documents, however, during the assessment years under consideration, the entire expenses have been disallowed on the basis that there has been no manufacturing or trading activity during the relevant previous years. The contention of the assessee before the authorities below remained that the assessee is a public limited company which has still not wound up. This fact has not been rebutted by the Revenue even before the ITAT. Further cont .....

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till not wound up and secondly following the principles of consistency, the administrative expenses incurred by the assessee should have been allowed by the Assessing Officer as was done in several assessment years immediately preceding the assessment years under consideration. The Delhi Bench of the ITAT in the case of DCIT vs. Fortune Garments Ltd. (supra) relied upon before us, the assessee company was neither dissolved nor was its business closed, the ITAT following several decisions of the .....

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