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Income Tax Appellate Tribunal, DELHI BENCHES “G” : DELHI
Before: SHRI ANIL CHATURVEDI & SHRI ANUBHAV SHARMA
Date of Hearing : 28.07.2022 Date of Pronouncement : 08.08.2022 ORDER PER ANIL CHATURVEDI, A.M. :
The appeal filed by the Revenue against the order of the Ld. CIT(A)-XXV, New Delhi order dated 25.01.2019 vide Appeal No.10285/18-19 for the A.Y. 2013-14.
Briefly stated facts of the case are that the assessee company is engaged in the business of refineries of 2 ITA.No.2664/Del./2019 M/s. Spice Energy Pvt. Ltd., New Delhi. petroleum products, crude, oils and all kinds of Mineral oils and gases. The assessee company filed it’s return of income on 25.09.2013 declaring a loss of Rs.2,76,33,365/-. The case was selected for scrutiny and thereafter, assessment was framed under section 143(3) of the I.T. Act, 1961 and the short term capital loss was determined by the A.O. at Rs.39,683/-. Aggrieved by the order of the A.O, the assessee carried the matter in appeal before the Ld. CIT(A) who vide order dated 25.01.2019 in Appeal No.10285/18-19 allowed the appeal of the assessee.
Aggrieved by the order of the Ld. CIT(A), the Revenue is now in appeal before the Tribunal and has raised the following grounds :
1. “Whether on the facts and circumstances of the case, the Ld. CIT(A) has erred in deleting the disallowance of Rs.2,75,93,683/- made by the AO without appreciating the facts that the assessee company did not carry out any business activity since its inception/incorporation. [Tax effect Rs. 33,03,567/-].
2. Whether on the facts and circumstances of the case, the Ld. CIT(A) also ignored that the expenses claimed in the P
3 ITA.No.2664/Del./2019 M/s. Spice Energy Pvt. Ltd., New Delhi. & L account is not incurred wholly and exclusively for the purpose of business. [Tax effect Rs.3,06,254/-]. 3. The appellant craves leave to add, alter or amend any of the ground(s) of appeal before or during the course of hearing of the appeal. [Tax effect Rs.5,61,947/-].”
On the date of hearing none appeared on behalf of the assessee nor any application seeking for adjournment has been filed. The case file further reveals that at the last hearing also none appeared on behalf of assessee though the notice of hearing was issued to assessee. In such a situation, we proceed to dispose of the appeal ex-parte qua the assessee, after hearing the Ld. D.R.
The Ld. D.R. at the outset submitted that though the Revenue has raised various grounds of appeal, but, the issue involved in all these grounds are inter-connected and, therefore, can be considered together. Before us, the Ld. D.R. supported the order of the A.O.
We have heard the submissions of Ld. D.R. and perused the material on record. We find that during the course of assessment proceedings the A.O. noticed that assessee had shown loss of Rs.2,74,74,332/- under the 4 ITA.No.2664/Del./2019 M/s. Spice Energy Pvt. Ltd., New Delhi. head “Income from Business & Profession” after claiming expenses of Rs.2,77,17,130/- and revenue operations shown as NIL. According to A.O. there is no business activity carried out by the assessee during the year. The assessee was, therefore, asked to furnish justification of claim of expenses in P & L A/c in view of the fact that there is no business activity carried out by the assessee. The assessee made submissions which were not found acceptable to A.O. Therefore, the A.O. held that since the assessee is not carrying out any business activity during the year, the expenses aggregating to Rs.2,75,93,683/- were not allowable and, therefore, the A.O. accordingly disallowed the same.
7. Aggrieved by the order of the A.O, the assessee carried the matter in appeal before the Ld. CIT(A). The Ld. CIT(A) after considering the submissions made by the assessee and for the detailed reasons given in the order, has decided the issue in favour of the assessee and while deciding the matter in issue, the Ld. CIT(A) observed as under :
5 ITA.No.2664/Del./2019 M/s. Spice Energy Pvt. Ltd., New Delhi. 6 ITA.No.2664/Del./2019 M/s. Spice Energy Pvt. Ltd., New Delhi. 7 ITA.No.2664/Del./2019 M/s. Spice Energy Pvt. Ltd., New Delhi.
6.1. We find that the Ld. CIT(A) after considering the submissions made by the assessee and while deciding the issue has noted that assessee being a Company which did not carry out any business had to maintain it’s own establishment so long as it is in operation and for the subsistence of the company, the expenses are required to be incurred and, therefore, have to be allowed. The Ld. CIT(A) after relying on the decision cited in the order has allowed
8 ITA.No.2664/Del./2019 M/s. Spice Energy Pvt. Ltd., New Delhi. and decided the issue in favour of the assessee. Before us, no fallacy in the findings of the Ld. CIT(A) has been pointed by the Revenue. In such circumstances, we are not inclined to interfere with the order of the Ld. CIT(A) and thus, the grounds of Revenue are dismissed.
In the result, appeal of the Revenue is dismissed. Order pronounced in the open Court on 08.08.2022.