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Bhagirath Tea & Chemicals Pvt. Ltd. Versus Asst. Commissioner of Income Tax, Central Circle-I, Lucknow

2015 (9) TMI 742 - ITAT LUCKNOW

Disallowance of expenses of fabric unit of the appellant company - whether there is no justification in rejecting the claim of expenses by treating the same to be in the nature of capital expenses? - Held that:- Regarding the nature of expenses, the assessee has filed copy of the ledger account on page 29 of the paper book and as per the same, an amount of ₹ 278,529/- was debited to pre operative expenses account during Financial Year 2007-08 with the narration that expenses are regarding .....

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ses is not available in paper book.

None out of seven judgments cited by Ld. AR of the assessee is rendering any help to the assessee in the present case. We have also seen that the assessee has not provided the details and nature of expenses incurred in the present case. Therefore, we do not find any reason to interfere in the order of the Ld. CIT(A). - Decided against assessee. - ITA No.915/LKW/2014 - Dated:- 20-8-2015 - SHRI SUNIL KUMAR YADAV AND SHRI A.K. GARODIA, JJ. For The Appe .....

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the ld. CIT(A) has failed to appreciate that the expenses related to business which the appellant company was duly authorized to carry on by its Memorandum of Association and, therefore, there is no justification in rejecting the claim of expenses by treating the same to be in the nature of capital expenses. 3. That the appellant has failed to appreciate that the expenses of ₹ 4,46,984/- relating to fabric unit were fully allowable business deduction as the same were written off since the .....

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ular Ltd. Vs. Addl. CIT 65 SOT 15 (Mum) (URO) 6. CIT Vs. Graphic India Ltd. 221 ITR 420 (Cal) 7. Bengal & Assam Investors Ltd. Vs. CIT 142 ITR 156 (Cal.) 4. None was present on behalf of the Revenue. Hence, the appeal was heard ex-parte qua the Revenue. 5. We have considered the submission of Ld. AR of the assessee. 6. The brief facts of the case till the assessment stage are noted by the CIT(A) at page 12 of his order and the same are reproduced as under:- In these grounds of appeal the app .....

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ereby getting the amendment vetted with the registrar of the companies. Once an activity as listed in the objects of the company, it is fully authorized to carry on such line of business and the same cannot be termed as any business not connected to the appellant. The ld. Assessing Officer has treated the expenses related to fabric unit to be expenses of a new line of business separate from the existing business and has proceeded to disallow the expenses and according to him the same is not allo .....

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f the I. T. Act. Regarding the nature of expenses, the assessee has filed copy of the ledger account on page 29 of the paper book and as per the same, an amount of ₹ 278,529/- was debited to pre operative expenses account during Financial Year 2007-08 with the narration that expenses are regarding the work in progress of Lifestyle Fabric as pre-operative expenses of new project. Similarly as per ledger account on page 28 of the paper book, further amount of ₹ 1,68,455/- was debited t .....

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ment cited by him is judgment of the Hon ble Guwahati High Court rendered in the case of DCIT Vs. Assam Asbestos Ltd. (Supra). In that case, the facts were that the assessee company was manufacturing asbestos sheets and the assessee company was contemplating setting up a mini cement plant and for this purpose, the assessee got a feasibility report prepared but the Government did not grant permission and under these facts, it was held by the Hon ble Guwahati High court that expenses incurred for .....

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f projects was a major activity of assessee corporation and the expenses incurred on such projects during the implementation stage was charged to the revenue for the year in which the payments are made and were shown under the head Project Survey Expenses and recovery of such expenses except the abandoned projects where no recoveries was made was credited to the head Receipts on Account of Projects Matured in the years of maturity of respective projects and this policy has been adopted because p .....

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that case, promotion of project was a major activity by the assessee corporation whereas in the present case, this is not so. Hence, this Tribunal decision is not applicable in the present case. 10. The third decision on which reliance has been placed by the Ld. AR of the assessee is the judgment of the Hon ble Calcutta High Court rendered in the case of CIT Vs. Graphite India Ltd. (Supra). In that case, the amount was paid by the assessee in order to explore the possibility of setting up a pet .....

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t of exploring availability of raw material of the existing project and therefore, the new project being setup was not independent of the existing project as in the present case. Therefore, this judgment is also not rendering any help to the assessee in the present case. 11. The next judgment on which reliance has been placed by the Ld. AR of the assessee is a judgment of the Hon ble Calcutta High Court rendered in the case of Bengal & Assam Investors Ltd. Vs. CIT (Supra). In that case, the .....

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T Vs. Tata Robins Fraser Ltd. (Supra). In Para 16 of this judgment, the nature of expenses have been taken note of which included a fee of ₹ 2,57,335/- paid to the Architect and some expenses of ₹ 46,379/- incurred on old capital work in progress which was abandoned and cost of damaged cabinets amounting to ₹ 12,776/- total expenditure of ₹ 3,16,490/-. Hence, it is seem that in that case also, the details and nature of expenses was brought on record which included fee of .....

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