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2016 (4) TMI 39 - ITAT DELHI

2016 (4) TMI 39 - ITAT DELHI - TMI - Disallowance of expenses - business expediency - Held that:- In the case of CIT versus Rajendra Prasad Moody (1978 (10) TMI 133 - SUPREME Court ), while deciding the issue for deduction for expenses under the head income from other sources, the Hon’ble court has held that what section 57(iii) requires is that the expenditure must be laid out or expended wholly and exclusively for the purpose of making or earning income and the section does not require that th .....

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y as well as business expediency. Accordingly the findings of the Ld. Commissioner of Incometax( Appeals) on the issue in dispute are reversed.

Disallowance of depreciation - building was let out and the rental income from the same was claimed under the head income from house property - Held that:- As the building was let out and therefore the depreciation corresponding to that part cannot be allowed to the assessee. In subsection (2) of section 38 of the Act, it is clearly laid down .....

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the depreciation in accordance with the provisions of section 38(2) of the Act. - ITA No. 4613/Del/2011 - Dated:- 30-3-2016 - Sh. H. S. Sidhu, Judicial Member And Sh. O. P. Kant, Accountant Member For the Appellant : Sh. BN Goswami, Advocate For the Respondent : Sh. Sarabjeet Singh, Senior DR ORDER Per O. P. Kant, A. M. This appeal of the assessee is directed against the order dated 5th August, 2011 of the Ld. Commissioner of Income-tax( Appeals)-XIX, New Delhi for assessment year 2008-09 raisi .....

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omputed. 4. That the assessment as framed being bad in law and facts merits to be set aside. 2. The facts in brief are that the assessee filed return of income declaring income of ₹ 21,23,090/-on 29/09/2008. The income declared was comprised of rental income, interest income and excess provision written back . The case was taken up for scrutiny and notice under section 143(2) of the Income-tax Act, 1961 ( in short the Act ) was issued and served within the stipulated period. In the course .....

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s provision written back. In response to the query of the Assessing Officer as to why the loss claimed under the head profit and gains of business may not be disallowed, the assessee submitted that the assessee company had been doing business and earned huge commission from the services provided to the foreign party in past years. The assessee company filed copies of the relevant assessment order when the receipt of the commission was taxed. However, the Assessing Officer did not accept the cont .....

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nst the income computed, the Ld. CIT(Appeal) directed the Assessing Officer to verify the record and allow the brought forward losses in accordance with the provisions of the Act. Aggrieved, the assessee is in appeal before the Tribunal. 3. In ground No. 1, the assessee has challenged both the disallowances i.e. the disallowance of expenditure of ₹ 12, 51, 610/-and disallowance of depreciation of ₹ 94,330/-. In ground No. 2 the assessee has challenged the disallowance of expenses of .....

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he infrastructure for providing professional services to foreign parties. The Ld. Authorised Representative, further submitted that in assessment year 2002-03, the assessment was completed under section 143 (3) of the Act i.e. the scrutiny assessment and all the expenses under the head profit and gains of business were duly allowed by the Assessing Officer. In subsequent assessment years i.e. 2012-13 and 2014-15 also such expenses have not been disallowed and therefore in view of the principle o .....

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ear, relied on the judgement of the Hon ble Supreme Court in the case of Commissioner of Income-tax versus Rajendra Prasad Moody reported in 115 ITR 519 (SC). On the other hand, the Ld. Senior Departmental Representative, relying on the order of the lower authorities submitted that no business or professional receipts were shown by the assessee during the year and as such no deduction for expenses towards business or profession was allowable to the assessee. 5. We have heard the rival submission .....

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been allowed to the assessee in earlier and subsequent years and the claim of the assessee has even been allowed in the scrutiny assessment completed in assessment year 2002-03. Thus, we are of the considered opinion that the principle of consistency requires that the assessee should have been allowed the similar expenses claimed under the head profit and gains from business or profession in the year under consideration also. The jurisdictional High Court in the case of CIT versus Dalmia Promot .....

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s judicata do not apply to IT proceedings, each assessment year being a unit by itself, yet in cases, where a fundamental aspect permeating through different assessment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it may not be appropriate to allow that position to be changed in a subsequent year. Their Lordships extracted with approval the following passage from Hoystead vs. Commr. of Taxation (1926) AC .....

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authority reiterating that principle." 8. The Court reiterated the following observation made by it in Parashuram Pottery Works Co. Ltd. vs. ITO. 1977 CTR (SC) 32 : (1977) 106 ITR 1 (SC) : "At the same time, we have to bear in mind that the policy of law is that there must be a point of finality in all legal proceedings, that stale issues should not be reactivated beyond a particular stage and that lapse of time must induce repose in and set at rest judicial and quasijudicial controve .....

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e facts. The law is, therefore, fairly well settled. For rejecting the view taken for the earlier assessment years, there must be a material change in the fact situation. There is no gainsaying that the previous view will have no application even in cases where the law itself has undergone a change but before an earlier view can be upset or digressed from, one of the two must be demonstrated namely a change in the fact situation or a material change in law whether enacted or declared by the Supr .....

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were, therefore, justified in holding that the view taken for the earlier assessment years continued to be applicable even for the year under consideration. 6. Further, from the details filed for the earlier and subsequent years, we find that the assessee was engaged in professional activity and maintained infrastructure in the form of office space and also incurred travelling expenses. It is quite possible that the assessee may not have been able to bring business or professional receipt durin .....

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s held that what section 57(iii) requires is that the expenditure must be laid out or expended wholly and exclusively for the purpose of making or earning income and the section does not require that this purpose must be fulfilled in order to qualify the expenditure for deduction and it does not say that the expenditure shall be deductible only if any income is made or earned. The same principle applies for allowability of deduction of expenditure under the head profit and gains of business. Thu .....

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t out and the rental income from the same was claimed under the head income from house property and thus necessary deduction has already been allowed under that head. Before the Assessing Officer, the assessee submitted that depreciation was claimed on the building which was for the personal use of the assessee, notwithstanding the fact that the substantial portion of the building was rented out and the standard deduction under section 24 was claimed and therefore the depreciation claimed in the .....

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