TMI Blog2021 (6) TMI 87X X X X Extracts X X X X X X X X Extracts X X X X ..... the order to the CIT(A) and direct the Assessing Officer to allow the business loss claimed by the assessee which includes an amount paid to the Managing Director. The grounds raised by the assessee are accordingly allowed. - ITA No.6505/Del/2018 (Assessment Year : 2014-15) - - - Dated:- 19-3-2021 - SHRI R.K. PANDA, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER Appellant by : Ms. Aditi Gupta, CA Respondent by : Sh. R.K. Gupta, Sr. DR ORDER PER R.K. PANDA, AM : This appeal filed by the assessee is directed against the order dated 26.07.2018 of the CIT(A)-9, New Delhi, relating to Assessment Year 2012-13. 2. Facts of the case, in brief, are that the assessee is a company and is engaged in the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eferred to the assessment order of AY 2012-13 and noted that the assessee company during the impugned assessment year was also following the same modus operandi of adjustment of the income from house property against the heavy losses claimed against business profession as in the AY 2012-13. He, therefore, asked the assessee to substantiate such huge losses adjusted against the rental income. Rejecting the various explanation given by the assessee, the Assessing Officer computed the income at ₹ 37,37,983/- by disallowing the business loss of ₹ 41,44,219/-. 5. Before the CIT(A), the assessee made elaborate arguments. However, the CIT(A) also was not satisfied with the arguments advanced by the assessee and upheld the disallow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is no provision in law which bars the appellant from entering into a business transaction with its sister concern. There is no doubt that purchases can be made from sister concerns. However, on perusal of the facts in hand, it appears that the transaction of purchase has been done merely to show that a business activity has been carried out, whereas in effect, no business activity has actually been undertaken by the appellant. 5.4 The AR also argued on the aspect of commercial expediency and submitted that the question of commercial expediency is to be judged by the appellant and not by the AO and also relied on various judicial pronouncements. The case laws relied by the appellant are applicable when there is a business activity and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant during AY 2012-13. The appellant had filed an appeal before Hon ble Delh Tribunal against that order which was remanded back to the file of the AO. The AO after due consideration, made the same disallowance of business loss and he held that in the years prior to AY 2012-13, no remuneration was paid to the director and in fact the quantum of sales was also very low (as was in AY 2014- 15 i.e., the year under consideration). The payment of remuneration started only from AY 2012-13 when the property was let out and hence, it is amply clear that the remuneration was paid with the sole intention to reduce the tax liability by setting it off against the property income. 5.8 In view of the above and considering the fact that on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that identical issue had come up before the Tribunal in assessee s own case for the AY 2012-13. The Tribunal vide ITA No.172/Del/2019, order dated 21.02.2020 has decided the issue in favour of the assessee. Since, the CIT(A) while deciding the issue against the assessee has followed the order of his predecessors for AY 2012-13 and since, the Tribunal has decided the issue in favour of the assessee, therefore, this being a covered matter in favour of the assessee, the grounds raised by the assessee should be allowed. 8. The Ld. DR, on the other hand, heavily relied on the order of the Assessing Officer and the CIT(A). 9. We have considered the rival arguments made by both the sides, perused the orders of the AO and the CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e managerial remuneration paid to the Managing Director Sh. Anshul Chawla of ₹ 36 Lacs. 5. The Hon ble Bombay High Court in CIT Vs. Indo Saudi Services (Travel) (P.) Ltd. (2008) 219 CTR 562 (Bom) had laid down the proposition that where the assessee and its subsidiary were in the same tax bracket and paid same rate of tax, there was no question of diversion of funds by paying higher rate to the subsidiary company and hence no disallowance under section 40(A)(2) of the Act. Applying the said proposition to the facts of the case where the Director Shri. Anshul Chawla is assessed to tax and has paid taxes on the said remuneration received by him then it cannot be said that there was diversion of funds by the assessee to its Managin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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