What did the Tribunal hold?

The Tribunal restored both issues to the file of the Assessing Officer for fresh examination. This was based on a coordinate bench's decision in earlier years for the business expenses and the need for the AO to examine documents related to the capital loss.

The assessee claimed expenses related to its business activities, which the Assessing Officer (AO) and CIT(A) disallowed, believing the assessee had ceased business. The assessee also claimed a short-term capital loss on vehicle sale, which was not fully considered by the AO.

What were the issues?

Whether expenses claimed by the assessee were allowable when the AO believed business activities had ceased, and whether the short-term capital loss was correctly considered.

Starcity Entertainment P.Ltd vs DCIT | ITAT Mumbai 2018

Income Tax Appellate Tribunal, “G” Bench, Mumbai

Before: Shri B.R. Baskaran (AM) & Shri Ravish Sood(JM)

For Appellant: Shri Sunil K. Ramani, Shri Vinay Sinha

For Respondent: Shri Nishant Somaiya

Hearing: 25.9.2018Pronounced: 25.9.2018

O R D E R Per B.R. Baskaran (AM) :-

The appeal filed by the assessee is directed against the order dated 1.8.2016 passed by the learned CIT(A)-52, Mumbai and it relates to A.Y. 2013- 14. Grounds urged by the assessee give rise to following two issues :-

(i) Disallowance of expenses claimed by the assessee on the ground that the assessee is not engaged in any business activity.

(ii) Non-consideration of short term capital loss of ` 49.69 lakhs arising on sale of vehicle.

Learned AR submitted that the assessee is engaged in the business of real estate and construction, finance and investment. The assessee had stopped its real estate activity in the year 2005 on temporary basis but was continuing with its finance and investment activities. The Assessing Officer took the view that the assessee has stopped business activities and accordingly disallowed the expenses claimed by the assessee. The learned CIT(A) also confirmed the same.

2 Starcity Entertainment P. Ltd.

Learned AR submitted that an identical issue was considered by the Coordinate Bench of the Tribunal in assessee’s own case in A.Y. 2009-10 to 2012-13 in 1523 & 4387/Mum/2013 & ITA No. 5551/Mum/2016 and the Tribunal, vide its order dated 27.6.2017, restored the issue to the file of the Assessing Officer for examining the issue afresh. He submitted that the second issue urged by the assessee may also be set aside to the file of AO, as the assessing officer has not examined certain documents relating to the same. Accordingly, learned AR submitted that both grounds may be restored to the file of the Assessing Officer for examining them afresh.

Learned DR, on the contrary, supported the order passed by the learned CIT(A).

Having heard the rival contentions, we are of the view that both issues contested by the assessee is required to be set aside to the file of the Assessing Officer for the reason that the issue relating to claim of expenses has been restored to the file of the Assessing Officer by the Coordinate Bench in the earlier years and the assessee likes to furnish certain documents relating to the second issue, which needs to be examined by the AO. Accordingly, we set aside the order passed by the learned CIT(A) and restore both issues to the file of the Assessing Officer for examining them afresh in accordance with law, after affording adequate opportunity of being heard to the assessee.

In the result, appeal filed by the assessee stand allowed for statistical purposes. Order has been pronounced in the Court on 25.9.2018.

STARCITY ENTERTAINMENT P.LTD,MUMBAI vs. DCIT CC 4(2), MUMBAI

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