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Income Tax Appellate Tribunal, AMRITSAR BENCH, AMRITSAR (SMC
Before: SH. SANJAY ARORA
IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR (SMC) BEFORE SH. SANJAY ARORA, ACCOUNTANT MEMBER I.T.A. No. 315/Asr/2014 Assessment Year: 2009-10
Pawan K. Katia vs. Income Tax Officer, Prop. M/s Laxmi Oil Mills, Ward 1(2), Bathinda Amrik Singh Road, Bathinda [PAN: ACLPK 6018P] (Appellant) (Respondent)
Appellant by : Sh. P. N. Arora (Adv.) Respondent by: Sh. Charan Dass (D.R.) Date of Hearing: 27.03.2019 Date of Pronouncement: 30.04.2019
ORDER Per Sanjay Arora, AM: This is an Appeal by the Assessee directed against the Order by the Commissioner of Income Tax (Appeals), Bathinda ('CIT(A)' for short) dated 04.02.2014, partly allowing the assessee’s appeal contesting his assessment u/s. 143(3) of the Income Tax Act, 1961 ('the Act' hereinafter) dated 09.02.2011 for the Assessment Year (AY) 2009-10.
The sole issue arising in this appeal is the maintainability of the disallowance of expenditure in a sum of Rs.4,17,433, stated as incurred for maintenance of business premises.
2 ITA No. 315/Asr/2014 (AY 2009-10) Pawan K. Katia v. ITO 3. The assessee returned his income for the year under the heads ‘income from house property’ (for rental income) and ‘income from the other sources’ (for interest income). He, running a cold storage, since discontinued, claims that the said business stands only suspended, so that all the expenditure incurred for the upkeep of the business premises, as well as to keep it in readiness, so as to able to start his business as when the right opportunity strikes, is deductible. The same was denied as it is the only the income of the business carried on by the assessee during the relevant year that is assessable u/s. 28 of the Act. No business was admittedly carried out during the relevant year for the assessee to claim any expenditure. Aggrieved, the assessee is in second appeal.
I have heard the parties, and perused the material on record. The assessee’s case, as discerned, is that the cold storage business has been only temporarily suspended. Regular expenditure on salaries, travelling, electricity, telephone, etc., is being incurred, to keep the business in readiness, i.e., so as to be able to restart it as and when ‘right opportunity’ comes. Where so, the claim for expenditure should not attract any disallowance. This is as it is not necessary that the expenditure should result in a positive income or some receipt. However, apart from a bald claim, there is nothing on record to support the assessee’s case/version. Since when is the business closed or suspended? Surely, they would be strong and pressing reasons for the same, which are unit/assessee, and not, industry, specific – there being nothing to indicate the latter. What are those reasons, which are conspicuous by their absence? What is being done, more particularly, the steps taken during the relevant year to start the business, addressing the said, unspecified reasons, causing its’ cessation or suspension in the first place? What is meant by ‘right opportunity’? Did the business eventually start? If so, when and how? Merely incurring expenditure, unless shown to be incurred for reviving the cold
3 ITA No. 315/Asr/2014 (AY 2009-10) Pawan K. Katia v. ITO storage business, could not countenanced. In fact, there is no expenditure on repairs, which is mentioned as the expenditure is stated to have been incurred for the upkeep of the premises. A direct nexus of the expenditure being claimed and the assessee’s business, even if it does not result in any receipt – which is in law not relevant, would stand to be established for it to be allowed, i.e., where so shown, and which is not. Why, even in a running business, it is only the expenditure incurred wholly and exclusively for business purposes that is deductible section 37(1). The loss on trading in channa is a different business altogether, even as found by the first appellate authority.
I have, for the foregoing reasons, no hesitation in upholding the impugned disallowance. I decide accordingly.
In the result, the assessee’s appeal is dismissed. Order pronounced in the open court on April 30, 2019 Sd/- (Sanjay Arora) Accountant Member Date: 30.04.2019 /GP/Sr. Ps. Copy of the order forwarded to: (1) The Appellant: Pawan K. Katia Prop. M/s Laxmi Oil Mills, Amrik Singh Road, Bathinda (2) The Respondent: Income Tax Officer, Ward 1(2), Bathinda (3) The CIT(Appeals), Bathinda (4) The CIT concerned (5) The Sr. DR, I.T.A.T True Copy By Order