TMI Blog2016 (11) TMI 392X X X X Extracts X X X X X X X X Extracts X X X X ..... 0/- in its return of income. It means the assessee himself has disallowed the loss of ₹ 1,16,15,803/-. So, we do not find any infirmity in CIT(A) order in allowing legitimate claim of business expenditure incurred by the assessee. - Decided in favour of assessee - ITA No. 4480/MUM/2011 - - - Dated:- 30-9-2016 - SHRI R.C.SHARMA (AM) AND SHRI RAM LAL NEGI (JM) For The Appellant : Shri. Surabhi Sharma For The Respondent : Shri. S.C.Tiwari and Ms. Rutuja N.Pawar ORDER PER RAM LAL NEGI, JM This appeal has been preferred by the revenue against order dated 06/01/2011 passed by the Ld. CIT(Appeals)-1, Mumbai, for the Asst. year 2006-07, whereby the Ld. CIT(A) allowed the appeal preferred by the assessee against a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss of appellant was not discontinued but it was merely a suspension of manufacturing activities which cannot be considered as closure or discontinuation of business activities. The appellant s business was in operation during the year under consideration and expenses were incurred in connection with the business of the assessee. Further the provisions of section 44AB are not applicable to the present case as in the year under consideration the appellant s gross turnover was below the prescribed limit. Aggrieved by the impugned order the revenue is in appeal before the Tribunal and it has raised the following effective grounds of appeal:- 1. Whether on the facts and circumstances of the case and in law, the CIT(A) erred in deleting the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Hon ble Supreme Court and Hon ble High courts in the cases above referred, any expenditure which is incurred for keeping the business alive is considered as wholly and exclusively for the purpose of the business. The assessee has to meet establishment charges and other expenses during the period of inactivity of the entity. The Ld. A.R. further submitted that the impugned order passed by the Ld. CIT(A) in accordance with the principles of law laid down in the aforesaid cases. 5. On the other hand the Ld. Departmental Representative (DR) relying on the assessment order submitted that since no business activity was carried out by the assessee during the assessment year under consideration, the assessee cannot claim expenses of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y period cannot be considered as closure or discontinuation of business activity. Thus, after taking note of this fact, I consider it proper to hold that the appellant s business was in operation during the year under consideration and the expenses are in the nature of r business purpose only. Further the contention of the appellant that the provisions of section 44AB of the Act,1961 are not applicable to the appellant is also acceptable as in the year under consideration the appellant s gross turnover is below the prescribed limit and the appellant being a corporate entity its accounts are subjected to audit and the same are audited by statutory auditors under the provisions of the companies Act, 1961, Further it is also submitted by the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vs. CIT (supra) has observed as under:- 12. The company may not obtain or be able to execute a single business contract for months and yet it may be deemed to carry on its business, if during the period of lull and inactivity it is kept above and if it retains its registered office and holds meetings. It is not necessary that a business to be in existence should have work all the time. There may be long intervals in inactivity and a concern may still be a going concern, though it may for sometime be quiet and dormant. The mere fact that a business has for some time been in that sense dormant would not mean that it has ceased to exist, the assessee continues to maintain an establishment and incur expenses in the expectation that work wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... holding that the view taken by the Tribunal is based on the decision of this court in Ormerods (India) P. Ltd. vs. CIT (1959) 36 ITR 329 (Bom) . This decision has now been approved by the Supreme Court in CIT Vs. Rajendra Prasad Moody 1978 CTR (SC) 141. 12. Hon ble Supreme Court in the case of CIT Vs. Malayalam Plantations Ltd.(supra) held that the expression for the purpose of the business is wider in scope than the expression for the purpose of earning profits. Its range is wide which may include measures for the preservation of the business and for the protection of its assets and property. 13. In view of the facts of the case and the principles of law laid down by the Hon hle Supreme Court and the High Courts, discussed in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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