EMPRESS TIN FACTORY P.LTD,MUMBAI vs. ITO 8(1)(3), MUMBAI

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ITA 568/MUM/2015Status: DisposedITAT Mumbai07 June 2018AY 2010-112 pages

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

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the AO had not proven the business was stopped permanently and noted that the assessee had revived its business activities. Following a previous decision for an earlier assessment year, the Tribunal directed the AO to allow the contested expenses.

What were the facts?

The assessee claimed business expenses, which were disallowed by the AO on the grounds that business activities had stopped. The CIT(A) confirmed this disallowance. The assessee argued that the business had a temporary lull and was revived.

What were the issues?

Whether business expenses are allowable when there is a temporary lull in business activities and not a permanent cessation. Whether depreciation is allowable in such circumstances.

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “E” Bench, Mumbai

Before: Shri B.R. Baskaran (AM)& Shri Pawan Singh (JM)

For Appellant: Ms. Dinkle Hariya
For Respondent: Shri V. Justin
Hearing: 7.06.2018Pronounced: 7.06.2018

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

The assessee has filed this appeal challenging the order dated 20-10- 2014 passed by Ld CIT(A)-16, Mumbai and it relates to the assessment year 2010-11. The assessee is aggrieved by the decision of Ld CIT(A) in confirming the disallowance of expenses claimed by the assessee on the reasoning that the assessee has stopped the business activities.

2.

We heard the parties and perused the record. We notice that the AO has disallowed the business expenses on the ground that the assessee has not carried out any business activities. The Ld A.R submitted that the AO had made identical disallowance in AY 2008-09 also and the Tribunal, vide its order dated 15-02-2017 passed in has allowed the expenses claimed by the assessee. With regard to depreciation claimed, the Ld A.R submitted that Tribunal has directed the AO to allow depreciation on proportionate basis.

2 M/s. Empress Tin Factory Pvt. Ltd. 3. At the time of hearing, the Ld A.R was asked to show as to whether the business of the assessee was revived subsequently or not. The Ld A.R submitted that the assessee has revived its business activities and in support of the same she filed copy of return of income filed for AY 2012-13.

4.

The Ld D.R supported the order passed by Ld CIT(A).

5.

We notice that the Tribunal has considered an identical issue relating to disallowance of expenses in the assessee’s own case in AY 2008-09, referred supra, and the Tribunal has directed the AO to allow the expenses on the ground that the AO has not shown that the assessee has stopped the business permanently. The return of income filed for AY 2012-13 would show that the assessee has revived its business activities, meaning thereby, there was temporary lull in the business activities. Accordingly, following the order passed by the Tribunal in AY 2008-09, we set aside the order passed by Ld CIT(A) on this issue and direct the AO to allow the expenses that are being contested before us. With regard to the claim of depreciation, we direct the AO to follow the directions given in AY 2008-09 and allow the same accordingly.

6.

In the result, the appeal of the assessee is treated as allowed. Order has been pronounced in the Court on 7.6.2018.

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