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2015 (8) TMI 130 - ITAT LUCKNOW

2015 (8) TMI 130 - ITAT LUCKNOW - TMI - Disallowance of manufacturing and other expenses - CIT(A) allowed part relief - Held that:- Undisputedly the assessee has gone to BIFR for revival of its industry and since there is temporary suspension of the business activities, therefore, minimum expenditure should be allowed. We accordingly find no merit in the arguments of the ld. D.R. Being convinced with the findings of the ld. CIT(A), we confirm the same. - Decided against revenue.

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& 95/LKW/2014, ITA No.88/LKW/2014 - Dated:- 30-7-2015 - SHRI SUNIL KUMAR YADAV AND SHRI. A. K. GARODIA, JJ. For The Department : Smt. Swati Ratna, D.R. For The Assessee : Shri. B.P. Yadav, Cost Accountant ORDER PER SUNIL KUMAR YADAV: These appeals are preferred by the assessee as well as the Revenue against the respective orders of the ld. CIT(A). 2. Since common issues are involved in these appeals, these were heard together and are being disposed of through this consolidated order. We, however .....

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manufacturing activities. 2. The ld. CIT(A) has erred in law and on facts in allowing the relief of ₹ 8,40,000/- as Director s remuneration without appreciating the fact that during the year under consideration no manufacturing activities were taken place as claimed by the assessee itself. 4. Apropos ground No.1, it is noticed that the assessee is a limited company and during the year under consideration it has not carried out any trading and manufacturing activity. The assessee-company ha .....

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cluding bonus, gratuity, employers contribution to provident fund, ESI, insurance, repairs and maintenance, etc. The assessee was asked to justify these expenses and in response thereto it was explained that the assessee s business has been temporarily suspended and the assessee-company has all intentions to resume the business and the assessee is pursuing the proceedings before the BIFR and the other corporate activities, legal and other proceedings relating to Company Law are being carried on. .....

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cation and suggestive of the assessee s intention to resume business in the future upon approval of the rehabilitation scheme under the provisions of the law relating to Sick Industrial Company enshrined in Sick Industrial Companies (Special Provision) Act, 1985. The Assessing Officer has not considered or rather brushed aside the facts and the law laid down by the Courts and has disallowed the entire expenditure for the reasons not known to the law. 7. The ld. CIT(A) re-examined the claim of th .....

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rarily suspended and there is every hope of its revival, minimum expenditure should be allowed to keep the industry of the assessee alive. 9. Having carefully examined the orders of the lower authorities in the light of the rival submissions, we find that undisputedly the assessee has gone to BIFR for revival of its industry and since there is temporary suspension of the business activities, therefore, minimum expenditure should be allowed. We accordingly find no merit in the arguments of the ld .....

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y preceding year. The assessee was asked to justify the payment of remuneration and other expenses in view the fact that no business activity was carried on during the year under consideration. In response thereto, it was contended on behalf of the assessee that the business of the assessee is under suspension and has not been finally discontinued. With regard to the payment of remuneration to the Managing Director of ₹ 8.40 lakhs, the ld. counsel for the assessee has submitted that M/s So .....

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owed the claim of remuneration. The legal expenses of ₹ 87,345/- was also disallowed. Accordingly, a total disallowance of ₹ 13,18,626/- was made by the Assessing Officer. 12. Aggrieved, the assessee preferred an appeal before the ld. CIT(A) with the submission that during the year under consideration, ₹ 8.40 lakhs was paid by way of remuneration to its Managing Director Shri. R. K. Somany as against ₹ 10.50 lakhs in the preceding year. The said remuneration was duly appr .....

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resume the business activity after the sanction of the scheme by the BIFR. Relying upon this evidence, the ld. CIT(A) has allowed remuneration of ₹ 8.40 lakhs paid to the Managing Director. The other disallowance was confirmed. 13. Aggrieved, the Revenue has preferred an appeal before the Tribunal and the ld. D.R. has placed reliance upon the order of the Assessing Officer whereas the ld. counsel for the assessee has contended that the assessee s business is temporarily suspended and ther .....

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s allowed the remuneration paid to the whole time Managing Director of the company, having observed that the assessee s business is temporarily suspended and there is every possibility of its revival, as the assessee has gone in BIFR for revival of its business. We, therefore, find no infirmity in the order of the ld. CIT(A) on this issue and accordingly we confirm the same. I.T.A. No. 88/LKW/2014 & 95/LKW/2014: 15. These are cross appeals filed by the Revenue as well as the assessee against .....

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to provident fund, ESI, insurance, repairs and maintenance, etc. The assessee was asked to justify these expenses, but being not convinced with the explanations of the assessee, the Assessing Officer has disallowed the entire expenditure, which was restricted to by the ld. CIT(A) upto 50%. 18. Identical issue was examined by us in the foregoing appeal for assessment year 2006-07, in which we have allowed 50% of the expenditure of the total claim. Therefore, following our findings in the foregoi .....

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