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Ashok Surana Versus Commissioner of Income-Tax

2016 (6) TMI 696 - CALCUTTA HIGH COURT

Disallowance of long-term capital loss on sale of the capital asset, being silver utensils - Held that:- The silver utensils, according to the assessee, were purchased in the year 1966-67. The occasion to use the silver utensils for the purpose of business of the assessee arose at least 30 years after the silver utensils were allegedly purchased. Therefore, the silver utensils can by no stretch of imagination be said to have been purchased for the business of the assessee. - Decided in favour of .....

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that the sums are not verifiable. There is no indication as to what step was taken by the Assessing Officer to have those expenses verified. If the Assessing Officer takes no pains to have the expenses verified he cannot resort to disallowing any portion of the expenditure on the ground that they are not verifiable. This was a sheer act of arbitrariness which the Assessing Officer could not have done. The learned Tribunal did not realise the aforesaid position. They chose to bring down the amou .....

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er : Anupa Banerjee For the Respondent : M. P. Agarwal JUDGMENT 1. The subject matter of appeal is a judgment and order dated March 19, 2007 passed by the Income-tax Appellate Tribunal, "D" Bench, Kolkata, pertaining to the assessment year 2001-02. 2. The assessee is an individual. He is in the business of producing tele serials. He has offices at Calcutta, Bangalore, Delhi and Mumbai. He had shown to have incurred expenses on account of telephone a sum of ₹ 4,69,883 and a sum of .....

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77; 26,385. 3. The assessee had claimed to have spent a sum of ₹ 4,06,820 on account of expenses of the Mumbai office. Part of the expenses were supported by internal debit vouchers. The Assessing Officer, however, chose to disallow 20 per cent. of such expenses amounting to a sum of ₹ 81,364. The assessee had claimed a sum of ₹ 92,421 and ₹ 39,523 under the heading of 'general expenses and tea and tiffin' respectively, supported by debit vouchers. The Assessing O .....

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xpenditure claimed to have been incurred by him were for the purpose of his business. The assessee, in this case, appears to have discharged his onus. The Assessing Officer disallowed part of the expenses on the ground that they were not verifiable. 5. Mr. Agarwal was unable to show us any authority for the proposition that an expenditure which the Assessing Officer thinks to be not verifiable can straightaway be disallowed. It is not the case of the Assessing Officer that the assessee was unabl .....

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y portion of the expenditure on the ground that they are not verifiable. This was a sheer act of arbitrariness which the Assessing Officer could not have done. The learned Tribunal did not realise the aforesaid position. They chose to bring down the amount of disallowance without any reasons. The question always shall be whether the assessee has been able to prove the expenditure alleged to have been incurred by him for the purpose of his business. If the answer is in the affirmative, no part of .....

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earned Tribunal took a different view which is as follows : "We have examined the rival submissions. We are of the view that if the assessee has purchased silver items they were for the use in the business and, therefore, could not be treated as personal effects. It is also difficult for us to believe that the assessee could buy silver jewellery and sell the same at a loss after a lapse of several years. Over a period of time the value of silver and gold always appreciates. Therefore, it is .....

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to believe that the silver utensils were sold at a loss. Therefore, the order disallowing loss of the sum of ₹ 1,60,562 was maintained. 8. Mrs. Banerjee, learned advocate, appearing for the appellant-assessee submitted that the learned Tribunal has accepted the contention of the assessee that the silver utensils were purchased for business purposes. Therefore, the loss arising out of the sale should have been allowed to be carried forward. 9. We have not been impressed by the submission f .....

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