TMI Blog2021 (3) TMI 831X X X X Extracts X X X X X X X X Extracts X X X X ..... etails filed by the assessee, we find that although assessee has debited huge expenditure under various heads of expenditure, but failed to file any evidences to prove that there is a nexus between expenditure debited into profit loss account and business operations of the assessee. Therefore, it is a well settled principle of law that whether or not any revenue from operations normally overhead expenditure incurred for maintaining corporate status of the assessee needs to be allowed. To ascertain the fact with regard to nature of expenditure and necessity of incurring such expenditure with reference to business operations of the assessee, the evidences needs to be examined by the AO. Therefore, to verify the claim of the assessee t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner of Income Tax (Appeals) failed to appreciate that the assessee company was set up in the year 2005 and that substantial sum of revenue was realised from commercial activity during the years ended 31/03/2012, 31/03/2013 and 31/03/2014 as is evident from the financial for the respective years. The Commissioner of Income Tax(Appeals) is not justified in holding that the expenses incurred during the year have no nexus to the business activities of the assessee company. The commissioner of Income Tax (Appeals) ought to have appreciated that the expenditure is deductible since the company is bound to incur expenditure to maintain its office, payment of salary, rent, etc. 3. For these grounds and such other grounds as may be canvass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee and according to him there is no justification for claiming huge expenditure, when there is no business operation for the year under consideration. Therefore, he was of the opinion that there is no nexus between expenditure debited into profit loss account and business operation of the assessee and therefore, following the decision of ITAT, Bangalore in the case of Kingfisher Training Aviation Services Ltd., vs. ACIT disallowed entire expenditure debited into profit loss account amounting to ₹ 4,32,62,470/-. 4. Being aggrieved by the assessment order, assessee preferred an appeal before the CIT(A). Before the CIT(A), the assessee reiterated its arguments taken before the Assessing Officer and submitted that when there is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of expenses without appreciating the fact that when there is temporary null in the business, genuine expenditure incurred for the purpose of business cannot be disallowed merely for the reason that there is no revenue from operations. He, further submitted that there is no finding of fact from the AO that expenditure debited into profit loss account are not genuine. There is no observation from the AO regarding genuineness of payment made by the assessee. Therefore, when expenditure incurred by the assessee are genuine in nature, which are incurred wholly and exclusively for the purpose of business then the same cannot be disallowed for the simple reason that there is no revenue from operations, when the assessee has explained reaso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ideration. It is also not a case of the AO that the assessee has not earned any revenue from operations in the past. In fact, the evidences filed by the assessee clearly prove that the assessee has revenue from operations right from AY 2011-12 to AY 2014-15. But, there is no revenue from operations for the impugned assessment year. The assessee has explained the reasons for no revenue from operations as per which, there is a temporary null in the business, because of this, assessee could not realize any revenue from operations, but the business operations of the assessee are continued to be carried on, for which it has incurred various expenses. We find force from the arguments of the assessee that the assessee was in the business and has e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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