TMI Blog2018 (6) TMI 353X X X X Extracts X X X X X X X X Extracts X X X X ..... fund to the tune of ₹ 22,76,433/- whereas incurred several expenses such as cost of material, huge employment cost and also depreciation which appeared to be not necessarily incurred in order to keep the assessee company alive. In our opinion when there is no activity how the stock can be consumed to the tune of ₹ 22,76,433/-. Similarly, depreciation amount of ₹ 1,77,167/- were claimed. The assessee has not filed any details before the AO but even then the Ld. CIT(A) allowed the appeal by passing a cryptic order. In our opinion, the issue needs to be examined - restore the matter to the file of AO to examine the issue afresh - ITA No.6097/M/2016 - - - Dated:- 29-5-2018 - SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND SHRI RAJES ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .12.2015. 4. On the facts and circumstances of the case and in law, Ld.CIT(A) has erred in deleting the entire disallowance of business expenses of ₹ 20,69,525/- ignoring that: ( i) The assesse company by not having any business income during the relevant period and even subsequent years evidencing that the assesse had closed down the business activities. ( ii) In light of facts, effects of the case extent of business expenses claimed by the assesse during the relevant previous year were way about the expenditure essential running a company. 5. The appellant prays that the order of the CIT(A) on the above ground be set aside and that of the A.O. be restored. 6. The appellant craves leave to add, amend or alte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s under: 4.6 I have gone through the assessment order and submissions made by the appellant in this regard. In this regard it is noted that assessee has filed confirmation of fresh loans taken during the year. The assessee is in real estate business for which loans are required to be taken and repaid in normal course of business. The assessee has received loans in the books of accounts for which confirmations were filed before A.O giving name, PAN address etc. of the loan creditor. The money has come from banking channel and no cash loans were involved. The A.O. has not doubted the identity and creditworthiness of the loan creditors but made the addition by holding that genuineness of transaction is not established. It is noted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PAN numbers and other evidences such as bank statements were filed to prove the transactions and amounts received from various parties. The Ld. A.R. contended that the AO did not doubt the identity and creditworthiness of the parties but merely made the addition on the ground that the assessee has failed to file necessary evidences. The Ld. A.R. submitted that since the Ld. CIT(A) has given the finding of facts and verified the necessary evidences as filed by the assessee during the appellate proceedings and noted that the AO has not doubted the identity and creditworthiness of the parties then how the addition under section 68 of the Act could be made in such circumstances. 8. We have heard the rival contentions and perused the material ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 37(1), 32 36(1)(iii) of the Act as there was no business activity during the year. 11. In the appellate proceedings, the Ld. CIT(A) allowed the appeal of the assessee by observing and holding as under: 5.4. I have perused the assessment order and submissions made by the assessee in this regard. It is noted that assessee being artificial juridical person, it needs to incur certain expenditure to keep itself afloat and have its continued existence. The assessee company can only operate through it's Directors and employees and has to maintain an establishment. It is not a case of A.O. that the expenses claimed were excessive or unreasonable. The books of accounts were fully audited during the year. The mere fact that n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee is entitled to claim the expenses even if no business is done during the year and hence, only those expenses which are necessary to run the office of the company have to be allowed. In the present case, the assessee has filed details of expenses as under: i. Cost of raw material consumed Rs.2,11,800 ii. Employment benefit expenses Rs.14,55,300/- iii. Financial cost Rs.9,032.97 iv. Depreciation amortized cost Rs.1,77,167/- v. Other administrative expenses Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X
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