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M/s M.S. ASSOCIATES Versus ACIT, CENTRAL CIRCLE-4, NEW DELHI

2015 (9) TMI 1448 - ITAT DELHI

Disallowance of expenses - no business activities carried out during the year under reference - assessee is engaged in the business of lotteries - Held that:- As find from the record that the assessee is engaged in the business of lotteries and the business has never been closed or discontinued, as stated by the assessee. The firm is still in existence and maintaining regular establishment and infrastructure. The lottery business is being carried out on in terms of agreement with Nagaland and Me .....

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esumption about closure of the business. - Neither the AO nor the Ld. CIT(A) has appreciated the facts and evidence filed by the Assessee before needs to be considered by the AO. In the interest of justice, we remit back the issues in dispute to the file of the AO with the directions to consider the written submission filed by the assessee before the Ld. CIT(A) and decide the case afresh, under the law, after giving adequate opportunity of being heard to the assessee. Assessee is also direc .....

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Income Tax (Appeals)- XII, New Delhi pertaining to assessment years 2008-09 to 2011-12. Since the issues raised in these appeals are common and identical, hence, these appeals are being consolidated and disposed of by this common order. For the sake of convenience, we are dealing with the ITA NO. 2105/DEL/2014 (AY 2008-09). The grounds raised in the assessment year 2008-09 read as under:- 1(i). That on the facts and circumstances of the case, the Ld. CIT(A) was not justified in confirming the o .....

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of expenses are relating to year under reference and claim being in accordance with mercantile system of accounting, there is no ground or basis for disallowance of same. (iii) That the AO has even disallowed the expenses which are of statutory and incidental nature. 3(i) That on the facts and circumstances of the case, the AO was not justified in considering interest income which is incidental to the business activities as income from other sources as against the claim of the assessee that same .....

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. The facts narrated by the revenue authorities are not disputed by both the parties, hence, the same are not repeated here for the sake of convenience. 3. During the hearing, Ld. Authorised Representative/CA of the assessee, Shri R.S. Singhvi, has stated that Ld. CIT(A) was erred in confirming the order of the AO regarding closure of the business without appreciating the facts and written submission of the assessee. He further stated that the finding about the closure of the business is illegal .....

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side. 4. On the other hand, Ld. Sr. DR, Sh. Sudhiranjan Senapati, has relied upon the order of the Ld. CIT(A). 5. I have heard both the parties and perused the records, especially the order of the Ld. CIT(A). For the sake of convenience, I am reproducing the hereunder the findings of the Ld. CIT(A):- 1.1 I have considered the grounds raised in appeal and, the facts of the case. I have also considered the submission filed by the AR of the appellant. 1.2 The Assessing Officer has disallowed the ex .....

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s given a detailed breakup of the administrative expenses claimed amounting to ₹ 61,84,590/-. Further, the Assessing Officer has enquired about the status of the lottery business from the point of view of allowability business expediency of the claim of the said expenses. The assessee has tried to justify the claim by stating that dispute is going. on with the Director Meghalaya State Lotteries due to their demand of increasing their profit component. The fact is that the Director Meghalay .....

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efully considered the submission filed by the appellant, the facts of the case and the legal position of the issue. The claim of assessee that it had to spend lots of expenses to-resume the lottery business is devoid of merit for the reason that not only in the instant year but subsequent also no such business has been resumed. The assessee itself has submitted .a letter dated 20.11.2008, a reference of which has been made in the order of assessment, from the lotteries, branch of Finance Departm .....

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iance on the decision of Hon'ble Delhi High Court reported in International Marketing Ltd. Vs. Income Tax Officer [2007] 292 ITR 504 (Del). 1.5 Further, the claim of the legal and professional charges included, in the administrative expenses pertained to earlier years as found by the Assessing Officer and not to the instant year. 1.6 In view of the above and in view of the fact that the assessee has not produced anything on record by virtue of which the assessee can substantiate that it is l .....

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f the appellant is rejected and the grounds raised in appeal are dismissed. 6. After hearing both the parties and perusing the aforesaid finding of the Ld. CIT(A), I find considerable cogency in the assessee s submissions made before the Ld. CIT(A) that the assessee is a partnership firm and income under the head business has been computed at NIL and there is no case of any tax liability. The AO has made disallowance of claim of expenses on the ground that no business activities has been carried .....

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