TMI Blog2021 (9) TMI 1137X X X X Extracts X X X X X X X X Extracts X X X X ..... For the Revenue : Shri R.K. Gupta, Sr. D.R. ORDER This appeal filed by the Assessee is directed against the Order dated 29.11.2019 of the Ld. CIT(A)-3, New Delhi, relating to the A.Y. 2014-2015. 2. Facts of the case, in brief, are that the assessee is a company and filed its return of income on 26.11.2014 declaring total income of ₹ 34,01,900/-. From the various details furnished by the assessee, the A.O. noted that assessee-company was incorporated in January 2010 and till A.Y. 2013-14 had done business of imparting training in English Communication Skills, Personality Development Grooming and Interview Techniques. Assessee-Company had entered into a franchise agreement with M/s BAFEL Academy Pvt Ltd. (British Academy for English Language) for providing training in English Communication Skills etc. Due to reduction in number of students, Assessee-Company has stopped fresh batches in A.Y. 2013-14 onwards. During the year assessee-company earned interest income from investment in flat made with M/s. Vigneshwara Developments Pvt. Ltd. He further noted that the assessee had shown NIL Revenue from operations and shown income under the Head Income from other sourc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the expenses claimed to such earning nor the assessee has been able to justify the claim of expenditure. He further observed that the expenses so claimed by the assessee do not fall under the purview of Section 57(iii) of the I.T. Act, 1961. Accordingly, the A.O. disallowed the business expenses of ₹ 9,94,872/- debited to the P L A/c and added the same to the total income declared by the assessee and determined the taxable income at ₹ 43,96,772/-. 2.4. Before the Ld. CIT(A), the assessee submitted that all the expenses incurred by the assessee are for the purpose of business only and should be allowed. Referring the various expenses disallowed by the A.O. it was submitted that assessee is a Company and can only be run through natural persons. It was submitted that Salary Expenses of employees consist of one office Boy, one employee for official communication and one driver. Car Running Maintenance Expenses refer to expenses incurred for visiting various persons to explore business opportunities. Car Insurance Expenses is linked with the Car used for official purpose. Entertainment expenses are also incurred for meeting with persons to generate business opportu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - Circle-7(2), New Delhi ( Ld. AO ) and Ld. CIT(A) is wrong and bad in law. 2. That on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in confirming the action of Ld. AO in assuming the incorrect jurisdiction while passing the assessment order under section 143(3) of the Act. In doing so, the Ld. AO erred in assuming the jurisdiction over the appellant in the absence of the order of transfer of jurisdiction from Income Tax Officer, Ward -7(3), New Delhi to Ld. AO i.e. Deputy Commissioner of Income Tax, Circle 7(2), New Delhi. 3. That on the facts and circumstances of the case and in law, the Ld. CIT(A)/Ld. AO erred in making disallowance of all the business expenses incurred by the appellant during the year under consideration. In doing so, the Ld. CIT(A) / Ld. AO grossly erred in: 3.1. holding that there is no nexus between the expenses incurred by the appellant and income earned during the year; 3.2. disallowance of expenses stating that no business has been carried out by the appellant; 3.3. not appreciating the fact that the appellant was making efforts to run the business of imparting trainings during the year, however, co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in disallowing various expenses. 7. The Ld. D.R. on the other hand heavily relied on the orders of the A.O. and Ld. CIT(A). 8. I have considered the rival arguments made by both the sides, perused the orders of the A.O. and the Ld. CIT(A) and the paper book filed on behalf of the assessee. I have also considered the various decisions cited before me. I find the A.O. in the instant case disallowed expenses of ₹ 9,94,872/- on the ground that assessee has not carriedout any business activity and no business income has been declared and the assessee failed to produce the complete books of account, bills and vouchers etc. I find the Ld. CIT(A) upheld the action of the A.O, the reasons of which have already been reproduced in the preceding paragraph. It is the submission of the Learned Counsel for the Assessee that it has not stopped its business and is maintaining an office and there is simply lull in the business activity. It is also his submission that due to less number of students the assessee thought it prudent not to admit any student for this year to minimize its expenses. According to him, merely because there is no business income during the year and when the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal by observing as under : 8. . In our opinion, no substantial question of law arises from the decision of the Tribunal. It has been found as a fact by the Tribunal that the assessee had not closed its business and had every intention to revive the same. The basis for this finding is the fact that the assessee had kept its establishment alive by paying salary and other allowances to the staff and had also acquired plant and machinery in the relevant previous year and had further incurred repair expenditure on its existing plant and machinery. These findings have not been challenged by the revenue as perverse. In fact, the allowance of the salary payments, staff welfare and repairs and maintenance expenditure by the CIT (Appeals) was not challenged by the revenue by filing any appeal on those points before the Tribunal and this aspect has been referred to by the Tribunal in para 9 of its order. Thus, the revenue had impliedly accepted the fact that the business was kept alive in the hope of revival and there was only a temporary lull in the business activities. If the assessee had purchased new plant and machinery and had also incurred repair expenditure of ₹ 1.23 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... siness is largely to be decided on the facts and circumstances of each case. In our opinion, the Tribunal has not committed any error in applying the ratio laid down in the judgments of this Court to the facts of the present case in order to uphold the assessee's claim for depreciation. 10. In the light of the foregoing discussion we are of the view that no substantial question of law arises from the order of the Tribunal for decision. Accordingly, the appeal filed by the Revenue is dismissed with no order as to costs. 8.2. Since the facts of the instant case are identical to the facts of the case decided by the Hon ble jurisdictional Delhi High Court in the case of Commissioner of Income Tax vs., Integrated Technologies Ltd., (supra), I hold that merely because assessee has not earned any business income during the year, but, has every intention to revive the same, therefore, the various expenses debited to the P L A/c cannot be disallowed especially when the assessee is maintaining its Office and kept its infrastructure ready for future business. In this view of the matter, I set aside the order of the Ld. CIT(A) and direct the A.O. to allow the expenses claimed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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