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2016 (1) TMI 542 - DELHI HIGH COURT

2016 (1) TMI 542 - DELHI HIGH COURT - TMI - Disallowance tax deductible expenses - Held that:- Disallowance of the expenses to the extent of ₹ 3.44 lakhs by the AO cannot be sustained in law particularly when audited accounts, containing two separate P&L accounts for the two distinct lines of activity, were not rejected. The disallowance could not have been made on the basis of surmises and conjectures. There was no material before the AO to come to the conclusion that the expenses were ei .....

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hashi M. Kapila with Mr. Pravesh Sharma, Mr. Sushil Kumar and Mr. Sanjay Kumar, Advocates. For the Respondent : Mr. Kamal Sawhney, Senior Standing counsel with Mr. Raghvendra K. Singh, Mr.Shikhar Garg And Mr. Sharad Agarwal, Advocates. ORDER 1. This appeal under Section 260A of the Income Tax Act, 1961 ( Act ) is directed against an order dated 15th December 2003 passed by the Income Tax Appellate Tribunal ( ITAT ) in ITA No. 2015/Del/2000 for the Assessment Year ( AY ) 1996-97. 2. While admitti .....

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porate deposits. The AY in question i.e. 1996-97 was the first year in which the Assessee undertook the business of financial activities. 4. The Assessee filed its return declaring an income of ₹ 13,34,870. Enclosed with the return were two audited Profit & Loss Accounts - one relating to the agricultural activities in which a loss of ₹ 84,890 was shown and the other relating to financial activities showing a net profit of ₹ 13,34,872. 5. The return was picked up for scruti .....

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ial activities of the company. This was basically in respect of two items of expenditure - one, the Director s salary which was ₹ 44,000 per annum and the other in the sum of ₹ 3 lakhs towards the salary paid to the staff and other miscellaneous expenses. 6. The appeal by the Assessee was allowed by the Commissioner of Income Tax (Appeals) [ CIT (A) ] by an order dated 14th January 2000. The CIT (A) noted that the Assessee had started paying salary to its Directors from the year in w .....

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