ACIT-1(1)(1), MUMBAI vs. M/S. CHEMICALS AND FERRO ALLOYS PVT LTD, MUMBAI

ITA 1996/MUM/2023Status: DisposedITAT Mumbai11 December 2023AY 2013-1414 pages
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What did the Tribunal hold?

The Tribunal held that the suspension of business was temporary and not a permanent closure. Therefore, expenses incurred for preserving the business and assets were allowable, and various incomes were to be treated as business income.

What were the facts?

The assessee company, which had temporarily suspended its manufacturing operations due to financial difficulties and legal disputes, offered various incomes like lease rentals and interest as business income. The Assessing Officer disallowed these expenses, treating the income as from other sources, arguing the business was permanently closed.

What were the issues?

Whether expenses incurred during a temporary business suspension are allowable, and whether income from leasing assets and interest earned during such period should be treated as business income.

Which sections of the Income-tax Act were involved?

Section 143(2),Section 57(iii)

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Income Tax Appellate Tribunal, “C” BENCH, MUMBAI

Before: SHRI ABY T VARKEY & SHRI AMARJIT SINGH

Hearing: 16.11.2023Pronounced: 11.12.2023

Per Amarjit Singh (AM):

This appeal filed by the revenue is directed against the order passed by the ld. CIT(A) NFAC, dated 30.03.2023 for A.Y. 2013-14. The assessee has raised the following grounds before us:

“1. Whether on the facts and circumstance of the case and in law, the Ld. CIT(A) erred in deleting the disallowances made on account of expenditure incurred with respect to Salary expenses. Increment, Electricity charges, Insurance charges without appreciating the findings of Assessing officer that the assessee was not interested in reviving the closed business?"

The order continues below.

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