TMI Blog2011 (1) TMI 1512X X X X Extracts X X X X X X X X Extracts X X X X ..... d. CIT(A) erred in allowing the expenditure u/s 37(1) of the Act as claimed by the appellant company in its profit and loss account despite the fact that there were no business activities in the year under consideration. 2. That on the facts and circumstances of the case the ld. CIT(A) erred in holding that in earlier years and in later years, the assessee company had earned business income, as the assessee company was not involved in any business activity since June, 2002. 3. That on the facts and circumstances of the case, the ld. CIT(A) erred in ignoring the decision of the SC in the case M/s Bombay Steam Navigation Co. P. Ltd. Vs. CIT (1965)56 ITR 52, wherein it was held that income/loss from business/profession is chargeable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disallowance to expenditure claimed by the assessee on the ground that assessee did not carry any business activity during the year under consideration. It is the case of the assessee that due to gulf war the assessee could not export the goods and the assessee has now started the fabrication and erection business in the domestic market and as such there was temporary lull in the business due to circumstances beyond the control of the assessee, hence all these expenditures should be allowed. 5. Ld. CIT(A) has allowed the claim of the assessee despite the fact that it was brought to his notice that the Tribunal vide its order dated 4.3.10 in the case of the assessee with respect to assessment year 2004-05 in ITA No. 1295/Del/08 has reman ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvations of this Tribunal in this regard as contained in para 8 9 are reproduced below: - 8. We have heard both the parties on this limited issue about the admission of additional evidences. On perusal of the application, we find that the assessee has filed certain additional evidences in the form of balance sheet or statement of account as on 31.3.08 and31.3.09 alongwith some sale invoices for the F.Y. 07-08 to support the assessee s stand that the assessee revived its business in the subsequent years and there was no closure of business in the year under consideration. These documents goes to the root of the matter to decide as to whether the assessee closed its business for good or whether it was a lull period or temporary suspens ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de the matter as per provisions of law, on the basis of evidences and material available on record. We order accordingly. 9. In the result, the appeal filed by the assessee is treated to be allowed for statistical purpose. 11. In this view of the situation, for the present years also we restore the issue to the file of AO to decide the same in the line as directed by the Tribunal for A.Y. 04-05. For statistical purposes, these grounds of the revenue are allowed. 12. The only issue left to be decided in these appeals is ground no.4 5 for A.Y. 2007-08, this issue has been discussed by the AO in para 4.1 to 4.4. The AO has listed 20 parties for outstanding aggregated sum of ₹ 1,09,72,158/- and found that these sums were ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here was no evidence at all to hold that any liability had ceased to exist. There was consolidation of various accounts and no liability had been written off. Ld. CIT(A) has also referred to the decision of Hon ble Karnataka High Court in the case of Lecudiator, Mysore Agencies P. Ltd. Vs. CIT 114 ITR 853 (Kar.) to hold that even though the liability is barred by limitation and there is no abandonment of claim by the creditor, but still there is no cessation/remission of the liability and amount could not be added to the taxable income u/s 41(1) of the Act and thus, ld. CIT(A) has deleted the disallowance. 14. Ld. AR relying upon the order of AO pleaded that addition was rightly made and it has wrongly been deleted by ld. CIT(A). 15. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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