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2015 (10) TMI 1508 - ITAT MUMBAI

2015 (10) TMI 1508 - ITAT MUMBAI - TMI - Disallowance of expenses incurred under the head “Pre-operative expenses" - in the profit and loss account the assessee treated these expenses as pre-operative expenses but in the computation sheet the assessee claimed deduction of these expenses - Held that:- We rely upon the judgment of Kedarnath Jute Mfg. Co. Ltd. (1971 (8) TMI 10 - SUPREME Court ) wherein Hon’ble Apex Court held that whether the assessee is entitled to a particular deduction or not wi .....

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Cargoways India Pvt. Ltd., invoking the provisions of section 40A(2)(b) - Held that:- In addition to the reasoning given by the AO, the Ld. CIT(A) has further held that the assessee has defaulted in terms of provision of section 40(a)(ia) by not deducting TDS and therefore for these reasons also these expenses are not allowable. In addition to the above the Ld. CIT(A) has also given some observations with regard to some alleged variation in the books of account. We have observed that the AO and .....

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he concerned party i.e., M/s. Cargoways India Pvt. Ltd. Disallowance has been made and confirmed by the Ld. CIT(A) by making presumptions and surmises - re-examine all the facts and figures involved in this case and in case some doubts are observed, the cross verification should be made with the said party. - Decided in favour of assessee for statistical purposes. - ITA no.1073/Mum/2011 - Dated:- 9-9-2015 - SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER For The Appe .....

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in the circumstances of the case and in law, the Ld. CIT(A) erred in confirming the addition of ₹ 25,04,210/- made by the AO to the income of the Appellant by way of disallowing expenses incurred under the head Pre-operative expenses. b)The ld. CIT(A) failed to appreciate that the nature of these expenses was revenue and are incurred wholly and exclusively for the purposes of business carried out by the Appellant. c)In reaching to the conclusion and confirming such addition the ld. CIT(A) .....

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CIT(A) failed to appreciate that these expenses were incurred by M/s. Cargoways India Pvt.Ltd. on behalf of the Appellant and the same were reimbursed to them by the Appellant and as such there is no question of any excess or unreasonable payment because reimbursement pertained to the expenses actually incurred by M/s. Cargoways India Pvt.Ltd. c) In reaching to the conclusion and confirming such addition the ld. CIT(A) omitted to consider relevant factors, considerations, principles and evidenc .....

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argoways India Pvt.Ltd. on behalf of the Appellant and the same were reimbursed to them by the Appellant and as such there is no variation in the books of account nor there is any excess or unreasonable payment because reimbursement pertained to the expenses actually incurred by M/s. Cargoways India Pvt.Ltd., and (ii) the payments are not covered by the provisions of section 40(a)(ia). c) In reaching to the conclusion and confirming such addition the ld. CIT(A) omitted to consider relevant facto .....

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, to construct, develop, acquire, own and manage Container Freight Station, Container Yard. The AO noticed that the assessee company transferred a sum of ₹ 25,04,210/- to pre-operative expenses in profit and loss account. But in the computation sheet filed along with return of income (enclosed that paper book page 4 -5), the assessee claimed this amount by way of deduction from the amount of profits. In the assessment order, the assessing officer disallowed this amount on the ground that t .....

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expenses are revenue in nature and have been incurred for the purpose of the business of the assessee and pertain to the year under consideration. The assessee also submitted a chart, copy of which is enclosed in the paper book, showing the breakup and nature of these expenses but Ld. CIT(A) was also not satisfied and the disallowance made by the AO was confirmed. 4. Before us, the Ld. AR has taken us, through the details showning nature of the impugned expenses and relied upon various judgments .....

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e impugned expenses being pre-operative expenses, these were disallowable in nature and Ld. CIT(A) has rightly confirmed the disallowance made by the AO. 5. We have gone through the arguments made by both the sides. We find that the impugned expenses are routine expenses incurred in the course of the business. These are ostensibly revenue nature expenses and therefore these expenses are allowable in nature, as admittedly these have been incurred for the purpose of the business to the assessee. T .....

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which the assessee might take of his rights; nor can the existence or absence in his books of account be decisive or conclusive in the matter. In view of the given facts and well settled position of law, we hold that these expenses are allowable to the assessee and therefore, disallowance made by the AO is directed to be deleted. Ground no.1 of the assessee is allowed. 6. In grounds no.2 & 3, the assessee has challenged the action of Ld. CIT(A) in confirming the disallowance of ₹ 20,3 .....

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