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2015 (10) TMI 2255 - ITAT PANAJI

2015 (10) TMI 2255 - ITAT PANAJI - TMI - Business was not in operation - expenses for employee cost, administrative expenses and finance charges of a beverage unit - deduction u/s 37(1) - CIT(A) deleted the addition - Held that:- It is not in dispute that in the instant case, the business of beverage unit was temporarily suspended since assessment year 2002-03 and the assessee was making efforts to settle the dispute with Pepsi Ltd. for whom the assessee was doing bottling work and had to incur .....

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usiness has been abandoned permanently and expenditure incurred to keep the business alive in the hope of reviving the same is business expenditure allowable under sec. 37(1) of the Act. Further, Departmental Representative has merely relied on the order of the Assessing Officer, but could not point out any specific mistake in the order of the Commissioner of Income Tax (Appeals). - Decided against revenue.

Non deduction of TDS u/s 194H - commission paid to newspaper vendors - CIT(A) .....

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u - CA For the Respondent : Shri Siddappaji R N - DR ORDER Per N. S. Saini, Accountant Member These are the appeals filed by the Revenue against the separate orders of Commissioner of Income Tax (Appeals), Panaji-1, both dated 17/11/2014 for the assessment years 2006-07 & 2011-12. Assessment Year 2006-07 2. The sole issue involved in this appeal of the Revenue is that the Commissioner of Income Tax (Appeals) erred in deleting the addition amounting to ₹ 15,75,358/- claimed by the asses .....

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iness operation since 2002-03 and the Tribunal upheld the same vide order dated 19/07/2007 in I.T.A.No.99/PNJ/2007. Therefore, he disallowed the business expenditure for beverage unit claimed by the assessee. 4. On appeal, Commissioner of Income Tax (Appeals) deleted the disallowance by observing as under:- "6. I have gone through the assessment order and the submission of the appellant. It is a fact that during the year under consideration, the beverages unit of the appellant company was n .....

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7/- pertained to managerial remuneration of the Managing Director of the appellant company and not the beverages division alone and therefore the same could not have been disallowed. Regarding the claim of other expenses, the appellant argued that as per the provisions of S.37(1), any expenditure which is not capital or personal in nature and expended wholly and exclusively for the purpose of business, has to be allowed. There is no dispute that the expenditure is revenue in nature and the A.O. .....

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Traders vs. CIT. The content of assessee's submission is reproduced as under: "On the outset the appellant wishes to clarify that the appellant has not relied upon the decision of J. K. Traders vs. CIT. The said decision has been relied upon by the Commissioner of Income Tax in his order under section 263. In the above mentioned letter, the appellant has distinguished the said case as the facts differ. The appellant reiterates that in the above ease, the company was not able to commence .....

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h details of these expenses in Annexure-1, which clearly indicates that the said expenses were necessary for the upkeep of the plant. The appellant relies on the decision of Vazir Glass Works Ltd. in ITA/494/Mum/2005 which is directly on the issue. When these expenses were incurred the appellant was not aware that the business would have to be shut down. There was a dispute which could have been decided either way. Hence in case it was decided that the appellant recommence the operations, then m .....

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ation/documents required prior to completion of the appellate proceedings." I have tried to understand the facts of this case in the light of both the decisions, i.e. M/s. Vazir Glass Works and M/s. J.K.Traders, one being in favour of the appellant and the other, against it. In the instant case, the appellant had to suspend its manufacturing because of a dispute and the appellant had no option but to maintain its manufacturing facilities as in absence of maintenance, the plant itself would .....

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rt in the case of CIT Vs. Integrated Technologies Ltd. in I.T.A.No. 530/2011 order dated 16/12/2011, wherein the Hon'ble High Court has held that it is not necessary that plant and machinery owned by the assessee should be actually put to use in the relevant accounting year to justify the claim of depreciation and that even if the plant and machinery or other asset is kept ready for use in the assessee's business, the assessee would be entitled to depreciation. The only condition is that .....

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f the indications of nurturing the hopes of reviving the business. 6. The Authorized Representative of the assessee submitted that there was dispute with Pepsi Ltd. for which the assessee was doing bottling of aerated soft drinks and therefore, operations of the unit were temporarily suspended and the assessee was trying to resolve the dispute to recommence the business. Hence, expenditure for maintaining the plant and machinery and staff and incurring statutory expenditure was essential. Theref .....

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ute that the expenditure in question is genuine business expenditure of the assessee. The Hon'ble Delhi High Court in the case of CIT Vs. Anita Jain (2009) 182 taxmann 173 (Del.) and the Hon'ble Madras High Court in the case of L. Ve. Vairavan Chettiar Vs. CIT (1969) 72 ITR 114 (Madras) have held that in case of temporary suspension of business, there is nothing to show that the business has been abandoned permanently and expenditure incurred to keep the business alive in the hope of rev .....

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The sole ground of appeal of the Revenue is that Commissioner of Income Tax (Appeals) erred in deleting the addition of ₹ 1,36,43,978/- on account of commission paid to newspaper vendors without deduction of TDS under sec. 40(a)(ia) and deleting the addition of ₹ 2,76,00,979/- being payment of commission to advertising agents without deducting TDS under sec. 40(a)(ia). 9. Brief facts of the case are that the Assessing Officer found that during the year under consideration, the assess .....

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doing so, he held that tax was not deductable at source on the amount of trade discount allowed to the advertising agency and directed the Assessing Officer to delete the disallowance of ₹ 2,76,00,979/-. Further, he held that the Assessing Officer made disallowance under sec. 40(a)(ia) on the ground that payment made to vendors is commission on which TDS provisions are applicable since the vendors have to return unsold copies of newspapers. Therefore, the relationship between newspapers an .....

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ission. 11. The Revenue in the ground of appeal has stated that Commissioner of Income Tax (Appeals) has deleted the disallowance when the contract is in the nature of principal to agent basis and assessee would liable to make TDS as decided in the case of ACIT Vs. Bharati Cellular Ltd. 105 ITD 129 (Kolkata.). 12. The Departmental Representative has relied on the order of the Assessing Officer. He could not point out any specific mistake in the order of the Commissioner of Income Tax (Appeals). .....

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