CENTEC RRR SYSTEMS AND SENSORS PVT LTD,MUMBAI vs. ITO 15(1)(3), MUMBAI

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ITA 2755/MUM/2025Status: DisposedITAT Mumbai24 June 2025AY 2012-13Bench: SHRI SANDEEP GOSAIN (Judicial Member)4 pages

In favour of the Revenue: the assessee's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The tribunal proceeded ex-parte as the assessee failed to appear. It observed that no supporting documents (such as sales tax/VAT returns, ledger accounts, or revenue details) were filed to substantiate the commencement of business operations, leading to the disallowance of expenses. Finding no new facts to controvert the CIT(A)'s findings, the tribunal dismissed the appeal.

What were the facts?

The assessee, Centec RRR Systems and Sensors Pvt. Ltd., appealed against the CIT(A)'s order for AY 2012-13, disputing the treatment of interest income from fixed deposits as 'Income from Other Sources' and the disallowance of business expenses. The assessee contended that its business was in a preparatory stage, and it had filed a return under Section 148, with supporting documents for business operations.

What were the issues?

Whether interest income from fixed deposits should be assessed as business income or income from other sources, and whether expenses incurred during the preparatory stage of business should be allowed given the non-commencement of business operations.

Which sections of the Income-tax Act were involved?

Section 250,Section 143(3),Section 148,Section 37(1),Section 35D,Section 139

AI-generated summary — verify with the full judgment below

Before: SHRI SANDEEP GOSAIN

For Respondent: Shri Ram Krishn Kedia (Sr. DR)
Hearing: 17.06.2025Pronounced: 24.06.2025

स िवाई की िारीख / Date of Hearing 17.06.2025 घोर्णा की िारीख/Date of Pronouncement 24.06.2025 आदेश / O R D E R PER SANDEEP GOSAIN [J.M.]:- This appeal is filed by the assessee against the order of the Learned Additional/Joint Commissioner of Income-tax (Appeals), Gurugram-1 [hereinafter referred to as “CIT(A)”] dated 07.03.2025 passed u/s. 250 of the Income-tax Act, 1961 [hereinafter referred to as “Act”] for Assessment Year [A.Y.] 2012-13.

2.

The assessee has raised the following grounds of appeal:

A.Y. 2012-13 Centec RRR Systems and Sensors Pvt. Ltd. “1. That the learned Commissioner of Income Tax (Appeals) [CIT(A)] erred in dismissing the appeal filed by the appellant without properly appreciating the facts and the supporting documents submitted during the appellate proceedings.

2. That the learned CIT(A) erred in upholding the assessment order passed under section 143(3) of the Income Tax Act, 1961, despite the fact that the appellant had duly filed the return of income in response to notice under section 148.

3. That the learned CIT(A) erred in holding that the appellant had not commenced its business operations without considering the documentary evidence provided, including Sales Tax and VAT Returns, ledger accounts, and other financial documents.

4. That the learned CIT(A) erred in confirming the action of the Assessing Officer (AO) in taxing the interest income from fixed deposits as 'Income from Other Sources' rather than considering it as part of business income.

5.

That the learned CIT(A) failed to appreciate that the appellant was in a preparatory stage of business, and the interest income was generated from funds that were to be used for business purposes.

6. That the learned CIT(A) erred in upholding the disallowance of expenses under section 37(1) of the Act without properly considering the appellant's submissions that such expenses were directly related to business operations and were incurred in the normal course of business.

7.

That the learned CIT(A) failed to consider that the AO had not provided any substantive basis for rejecting the appellant's claim regarding the commencement of business operations.

8.

That the learned CIT(A) erred in not allowing amortization of expenses as per section 35D of the Income Tax Act.

9.

That the order passed by the learned CIT(A) is bad in law and contrary to the facts of the case, and therefore, requires to be quashed.”

3.

None appeared on behalf of the assessee when the case was called, even no application for seeking adjournment has been filed. From the records, I notice that the service of the present appeal was effected through RPAD and also through email. On the other hand, Ld. DR present in the court and is ready A.Y. 2012-13 Centec RRR Systems and Sensors Pvt. Ltd. to advance arguments. Therefore, I have decided to proceed with the hearing of the case exparte.

4.

In this case, the interest from the fixed deposit was treated as 'Income from Other Sources' instead of 'Business Income' on the ground that the assessee, being a private company, was a non-filer of return voluntarily u/s 139 of the Act, but had filed a return of income in response to a notice u/s 148 of the Act.

5. In order to substantiate that the assessee had commenced its business operations, no supporting documents were filed, such as sales tax and VAT returns, a copy of the ledger account for expenses, and details of revenue from operations. Therefore, expenses were disallowed. Furthermore, no new facts or documents have been placed before us to controvert the findings recorded by the Ld. CIT(A). Therefore, I find no reason to interfere with or deviate from the findings recorded by the Ld. CIT(A). Accordingly, the appeal of the assessee stands dismissed.

6.

In the result, the appeal of the assessee is dismissed. Order pronounced in the open court on 24.06.2025.

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