P.C.BHANDARI & CO. vs. ASSTT. COMMISSIONER OF INCOME TAX

ITA - 1272 / 2008HC Delhi14 December 20095 pages
For Petitioner: MR.SHASHI M.KAPILA
AI SummaryRemanded

What did the High Court hold?

The Tribunal's approach of disallowing expenses unless they had a direct nexus to specific income sources was deemed erroneous. The High Court held that if the business was merely dormant and not closed, expenses could be allowable as business expenditure and set off against other income.

What were the facts?

The assessee, a private limited company, claimed administrative expenses despite having no trading activity in the assessment year. The Assessing Officer disallowed these expenses against income from capital gains and other sources.

What were the issues?

Whether administrative expenses incurred during a year with no trading activity are allowable, and if so, against which head of income. Whether the business was dormant or closed down.

Which sections of the Income-tax Act were involved?

Section 14A,Section 37(1),Section 57(iii),Section 71,Section 271(1)(c)

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Cases cited in this judgment(2)Show list

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Cause title — parties, addresses and appearances
ITA No.1272/2008 Page 1 of 5 * IN THE HIGH COURT OF DELHI AT NEW DELHI + ITA 1272/2008 Date of Decision: 14th December, 2009 P.C. BHANDARI & CO. PVT. LTD. 45-GOLF LINKS, NEW DELHI ..... Appellant Through: Ms. Sashi M. Kapila, Advocate versus ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE: 14(1) ..... Respondent Through: Mr. Subhash Bansal, Advocate % CORAM: HON'BLE MR. JUSTICE A.K. SIKRI HON'BLE MR. JUSTICE SIDDHARTH MRIDUL 1. Whether reporters of local papers may be allowed to see the judgment? 2. To be referred to the Reporter or not? 3. Whether the judgment should be reported in the Digest?

J U D G M E N T

A.K. SIKRI, J. (ORAL)

1.

Admit.

2.

Following substantial question of law arises for determination: (i) Whether the ITAT has laid down an entirely erroneous proposition in law by holding that unless each and every item of expenditure is shown to have a direct, immediate and proximate nexus to each source of income, it is not an allowable expenditure? 2009:DHC:5406-DB

ITA No.1272/2008

The order continues below.

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