TMI Blog2021 (1) TMI 88X X X X Extracts X X X X X X X X Extracts X X X X ..... iscellaneous expenses, we find that none of the expenditure is having direct nexus with income earned for the year under consideration being interest income , rental income and dividend income. Unless, assessee proves nexus between expenditure debited into profit and loss account and income earned for the year, the question of allowance of expenditure does not arise. Moreover, assessee fails to file any evidence to prove that it was in the business activity but due to temporary lull in the business, business operations was not carried on for impugned assessment year . AO as well as learned CIT(A) have brought out clear facts that assessee has leased out factory premises to outside party and derived rental income as there is no manufac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ertain to assessment year 2016-17. 2. The assessee has raised the following grounds of appeal: 1. The order of Commissioner of Income tax (Appeals) is contrary to law, facts, and circumstances of the case. 2. The Commissioner of Income tax (Appeals) erred in confirming that the Appellant has not carried on manufacturing activity In this year without appreciating the fact that there was only a lull In the business operations. 2.1 The Commissioner of Income tax (Appeals) erred In confirming the disallowance of expenses claimed by the assessee under Salary, Repairs and maintenance, Miscellaneous expenses, Interest on vehicle loan and Depreciation to the extent of ₹ 9,79,8351-. 2.2 The Commissioner of Income tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd dividend income. The assessee has claimed various expenses against income from other sources like salary, repairs maintenance, interest on vehicle loan, depreciation and miscellaneous expenses. During the course of assessment proceedings, when the Assessing Officer has called upon the assessee to explain nexus between the expenditure debited into profit loss account and business operations, assessee submitted that although, it has not carried out any business activity for the impugned assessment year due to strike by workers, but it has continued to incur certain expenditure to keep plant machinery in active condition and also corporate identity of the assessee and hence it cannot be said that expenditure incurred is not having nex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion, even though there is no business operations for the impugned assessment year, therefore, merely for the reason that there is no income from main business operations necessary expenditure incurred for the purpose of business cannot be disallowed. 5. The learned CIT(A) after considering the relevant submissions of the assessee and also by taking note of various facts brought out by Assessing Officer held that insofar as depreciation is concerned onus is on the assessee to prove that motor car and air-conditioner has been actually used for the purpose of earning income. Since the assessee has not discharged its onus to prove that there is nexus between the depreciation and income earned for the year, the same cannot be allowed as deduc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the fact that assessee need to pay salary to employees to maintain and look after affairs of the company, even though there is no main business operations for the year. The AR further submitted that there is no doubt, for the impugned assessment year, assessee has not carried out any business activity because of strike from employees. However, assessee has actually engaged in the business of manufacturing for past several years . Although, assessee has leased out part of its factory premises to outsiders, but it has to maintain plant and machinery and for this purpose it has incurred repairs maintenance expenses. Likewise, assessee has to incur certain expenditure to maintain corporate status of the assessee, even though there is no main ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned for the year. In this case, on perusal of disallowances made by Assessing Officer for various expenditure including salary, depreciation on car and air-conditioner , repairs and maintenanceothers and miscellaneous expenses, we find that none of the expenditure is having direct nexus with income earned for the year under consideration being interest income , rental income and dividend income. Unless, assessee proves nexus between expenditure debited into profit and loss account and income earned for the year, the question of allowance of expenditure does not arise. Moreover, assessee fails to file any evidence to prove that it was in the business activity but due to temporary lull in the business, business operations was not carried on f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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