TMI Blog2011 (8) TMI 1338X X X X Extracts X X X X X X X X Extracts X X X X ..... expenses by holding a view that the income being fluctuation in exchange rate was not part of the business but was actually income from other sources . In respect of Assessment Year 2006-07,the assessee is in appeal on issues which have no direct bearing to the earlier issue insofar as the appeal for the Assessment Year 2004-05 is concerned but however, the principles are the same when disallowance of expenses claimed have been made on misplaced interpretation of facts. 2. The learned Counsel for the assessee, initiating his arguments submitted that the assessee is a wholly owned Company of a foreign Company filed return of income disclosing loss of ₹96,00,440 for the Assessment Year 2004-05. During the course of proceedings u/s.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccordance with the provisions of Section 43A. The learned Counsel for the assessee vehemently argued that how the assets, including the human resource, can be said to be not involved for generating the said income when the Assessing Officer chose to bring to tax the same as income from other sources . He pointed out that the assessee being a Limited Company was empowered to conduct any business in accordance with the direction of the Board of Directors which cannot be challenged by the Assessing Officer for the purpose of assessing a particular source of income under the residual head of income from other sources . The learned CIT(A) therefore, misdirected himself to hold that the Assessing Officer allowed only such expenditure as was rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad taken place in the impugned Assessment Year insofar as the assessee had not conducted the business which ultimately did not render any income to the assessee when the assets have been put to use including the human resources. The major expenditure being salary, therefore, could not be disallowed for holding that the assessee had not conducted any business. The Assessing Officer himself had chosen to allow part thereof clearly indicates that the action of the Assessing Officer in computing the income so rendered in the residual head as income from other sources was faulty and biased. All the expenses that were incurred by the assessee were for the purpose of its business and therefore have to be allowed as business loss cannot be dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rpose of the assessee s business cannot be adhered to insofar as the Assessing Officer has imposed a view of holding the income not belonging to the business of the assessee. The nomenclature clearly indicates that the same have been incurred for the purpose of business of the assessee. The difference between the ledger balance and financial statements had been explained to the Assessing Officer when the grouping of different ledger accounts were brought under the common head under the provisions of the Companies Act when expenses exceeding 1% of the total turnover are to be given a separate head. The disallowance of expenses claimed under the head travelling, conveyance, legal and professional charges therefore was on the basis of misinter ..... X X X X Extracts X X X X X X X X Extracts X X X X
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