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Income Tax Appellate Tribunal, “E”, BENCH MUMBAI
Before: SHRI R.C. SHARMA, AM & SHRI AMARJIT SINGH, JM
O R D E R PER R.C.SHARMA (A.M): This is an appeal filed by the Revenue against the order of CIT(A)-8 Mumbai, dated 29.02.2016, for the assessment year 2012-13, in the matter of order passed u/s.143(3) of the I.T. Act. 2. The only grievance of revenue relate to deleting allowance of administrative expenditure by holding that these expenses are allowable as business expenditure.
Sriram Asset Management
Administrative expenses disallowed by AO was deleted by CIT(A) after having following observation:-: 5.1.1 This ground pertains to disallowance of depreciation and administrative expenses. 5.1.2 I find that identical issues were decided by MY Ld. Predecessor vide order No. CIT(A)-8/IT-31/DCIT-3(3)/13-14 dated 26.03.2015 for AY 2010-11. The relevant extracts from CIT(A)’s order are reproduced hereunder: I also from the copy of mutual fund account scheme that the appellant company could restart its mutual fund account scheme that the appellant company could restart its mutual fund activities in AY 2014-15. In view of the above facts, there has been period of full in between but there is no discontinuation of business. I place reliance on the decision in the of KarsondasRanchhoddass vs. CIT 83 ITR (Bom); Hindustan Chemical Works Ltd. vs. CIT 124 ITR 561 (Bom). It is found that out of expenses of Rs.48,70,864/- claimed by the appellant being administrative expenses, the AO has allowed Rs.6,04,870/- and thereby making a disallowance out of the administrative expenses of Rs.41,65,994/-. In view of the findings delineated here-in-above, the AO is directed to allow the administrative expenses of RS.41,65,994/-.
Sriram Asset Management As there has been a period of lull in between but there was no discontinuation of business as mentioned here-in-above, the AO is directed to allow depreciation of Rs.1,68,590/-. 5.1.3 In view of the above, I am in agreement with my Ld. Predecessor and the AO is directed allow the administrative expenses and depreciation as claimed by the appellant. This ground of appeal is allowed. The Ld. AR also placed on record order of the Tribunal for the AY 2010-11 wherein similar issue was decided by Tribunal in assessee’s favour.
4. We have gone through the order of the Tribunal where the Tribunal has decided the issued as under :
9. Brief facts are, during the assessment proceedings, the Assessing Officer found that while computing the business income, assessee has claimed deduction on account of administrative expenses of Rs.86,57,534/- and depreciation of Rs.1,68,590/-. The Assessing Officer after verifying the nature of business carried on by the assessee as well as the source of income observed that though the assessees’s business is of asset management, however, the receipts shown by the assessee are not related to the said business activity. Therefore, the expenditure claimed is not wholly attributable to the business activities of the assessee. After verifying the details of expenditure incurred, the Assessing Officer held that only expenditure relating to annual custodial fee, auditor’s remuneration and filing fee are allowable expenditure.
Sriram Asset Management Accordingly, he allowed total expenditure of Rs.4,37,717/-. The assessee challenged the disallowance of expenditure before the first appellate authority.
The learned Commissioner (Appeals) after considering the submissions of the assessee held that the major heads under which the assessee has incurred expenditure are salary, advertisement, remuneration to auditors, board meeting expenses, director’s sitting fees, telephone, electricity, insurance, mutual fund expenses, printing and stationery, travel expenses and rent. After verifying the nature of expenses, the learned CIT(A) observed, such expenses were incurred for keeping the business structure intact. He also found that after the intervening period of lull, the assessee had again continued its mutual fund activity from assessment year 2014–15. He, therefore, allowed the expenditure to the extent of ` 41,65,994.
Learned Departmental Representative relying upon the observations of the Assessing Officer submitted, since the assessee has not carried out any business activity disallowance of expenses made by the Assessing Officer was proper. Learned Counsel for the assessee relied upon the observations of the learned Commissioner (Appeals).
We have heard rival contentions and perused the material available on record. On a careful reading of the learned Commissioner (Appeals)’s order as well as other materials on record, it is evident that the nature of expenditure allowed as deduction by the first appellate authority would clearly indicate that they were required to be made for keeping alive the Sriram Asset Management corporate structure of the assessee. It is also a fact that after a brief lull in its business activity, the assessee has resumed such business activity in the subsequent assessment year. In view of the aforesaid, we do not find any infirmity in the order of the learned Commissioner (Appeals) in allowing part of expenses. Grounds raised
are dismissed.
13. In the result, Revenue’s appeal is dismissed.
Facts and circumstances, during the year under consideration are same. Respectfully following the order of the Tribunal dated 05.10.2017 wherein exactly similar issue was dealt in assessee’s own case, we do not find any reason to interfere in the order CIT(A) allowing administrative expenses after having detailed observation at page 5.1.2. 5. In the result, appeal filed by the Revenue is dismissed. Order pronounced in the open court on this 08.01.2018 Sd/- Sd/- (AMARJIT SINGH) (R.C.SHARMA) न्यानयक सदस्य / JUDICIAL MEMBER ऱेखा सदस्य / ACCOUNTANT MEMBER भुंफई Mumbai; ददनांक Dated 08.01.2018 Rahul Sharma (Sr. P.S.)