TMI Blog2024 (1) TMI 148X X X X Extracts X X X X X X X X Extracts X X X X ..... e of expenditure owing to suspension of business operations by the assessee since year 2009 - CIT(A) deleted addition as on rule of consistency - HELD THAT:- As it is an undisputed fact that airline operations of the assessee are in suspended mode since the year 2009. However, there is no closure of the assessee by way of its liquidation since it is a corporate set up under the Companies Act. We find force in the submissions made by the Ld. Counsel that assessee being a company set up has to incur expenses irrespective of active business. We find that the sole basis of disallowance of expenses by the Ld. AO is in the backdrop that assessee did not carry out any business activity during the year. To our mind, not carrying on any business activities during a particular period cannot be equated with closure of business since it will lead to a narrow view of the scope of cessation of business. There is nothing on record to show that assessee has completely abandoned or closed the business forever by disposing of its assets and going into liquidation. On the contrary, from the perusal of its audited financial statement, it is revealed that assessee had been meeting various statutory ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operations of the assessee had been suspended in October, 2009 and there is no intention of the assessee to revive the operations. In this respect, assessee had submitted that it had claimed the expenses on the principle of going concern and are, therefore, allowable. However, Ld. AO disallowed the same. 4. Before us, Ld. Counsel for the assessee has placed a paper book containing 413 pages and also a supplementary paper book containing 33 pages which are on record. 5. Ld. CIT, DR supported the order of Ld. AO on the first issue. She asserted that since assessee had not furnished bank statement of the investor, ld. AO has rightfully added the amount in the hands of the assessee. On the second issue relating to disallowance of expenses, she supported the view taken by the Ld. AO as assessee has submitted that its business operations were suspended since the year 2009. According to her, since there is no business activity, there cannot be any claim of expenses by the assessee. 6. Per contra, Ld. Counsel for the assessee strongly supported the observations and findings given by the Ld. CIT(A). While giving relief to the assessee on the first issue relating to addition on ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) iv) Copy of bank statement of the appellant company (58 to 88) v) Copy of confirmation (118) vi) Copy of ledger account of Sh. Gopal Kumar Goyal in the books of appellant company for the period of 01.04.2011 to 31.03.2015 (382-388) vii) Copy of bank statement of sh. Gopal Kmar Goyal (389-391) 6.3. From the furnishing of these evidences of the share applicant, ld. Counsel asserted that all of these were before the Ld. AO, both at the time of the assessment of the assessee as well as at the time of assessment of the share applicant. These have been duly accepted by the Ld. AO while completing the assessment of the share applicant. 6.4. He also pointed to an important fact that assessee had made receipt and payment of share application money from the same applicant Shri Gopal Kumar Goyal, both in the preceding as well as in subsequent years which have not been doubted. To summarize the transactions of the assessee with the share applicant, following chart was submitted: 6.5. To support his contentions on this issue, ld. Counsel placed reliance on the decision of Hon ble jurisdictional High Court of Delhi in the case of PCIT Vs. Sat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the addition of Rs. 4,30,78,000/-. While holding so, we draw force from the decision of Hon ble jurisdictional High Court of Delhi in the case of Satkar Infrastructure Pvt. Ltd. (supra). Accordingly, ground no. 1, taken by the revenue in this respect is dismissed. 8. On the second issue relating to disallowance of expenditure incurred by the assessee, Ld. Counsel for the assessee referred to the statement of P L Account, Note No. 26 27 containing details of employee benefit expenses, operational expenses and administrative expenses incurred by the assessee, totaling to Rs. 3,99,18,595/-. The same is extracted below for ease of reference: 8.1. Ld. Counsel submitted that assessee was incurring losses which led to suspension of its airline operations. However, all the assets of the company were ready to put to use during the year. According to him, mere fact that there are no operation during the year does not mean that there is no business. He further submitted that findings of Ld. AO that there was no intention of the assessee to revive the operations is not based on any material and hence, disallowance made on this basis is not on correct appreciation of facts and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wing the ratio of the above said decision, we are of the opinion that the Assessing Officer has erred in rejecting the business loss of the assessee admitted in the return of income. The Assessing Officer should have appreciated that there was business activity, though there was no revenue during the previous year under consideration. Hence, in our opinion the expenditure is relatable to the business activity and the same is allowable as a deduction. 9. From the submissions made before us, we note that it is an undisputed fact that airline operations of the assessee are in suspended mode since the year 2009. However, there is no closure of the assessee by way of its liquidation since it is a corporate set up under the Companies Act. We find force in the submissions made by the Ld. Counsel that assessee being a company set up has to incur expenses irrespective of active business. We find that the sole basis of disallowance of expenses by the Ld. AO is in the backdrop that assessee did not carry out any business activity during the year. To our mind, not carrying on any business activities during a particular period cannot be equated with closure of business since it will lead ..... X X X X Extracts X X X X X X X X Extracts X X X X
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