ROBERT MCLEAN CONSULTANTS P.LTD,KOLKATTA vs. DCIT CEN CIR 1(2), MUMBAI

PDF · subscribers
ITA 1595/MUM/2017Status: DisposedITAT Mumbai25 September 2017AY 2012-133 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 expenses were establishment expenses necessary to keep the company operational and that the genuineness of the expenses was not doubted. Relying on judicial precedents, the Tribunal found no merit in the disallowance.

What were the facts?

The assessee debited expenses totaling Rs. 1,15,402/- to its Profit and Loss account, which were paid out of cash in hand. The Assessing Officer disallowed these expenses on the grounds that there were no purchase and sale transactions during the year.

What were the issues?

Whether bare minimum establishment expenses incurred to keep a company alive are allowable even if there are no purchase and sale transactions during the year.

Which sections of the Income-tax Act were involved?

Section 143(3)

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(2)Show list

Detected automatically from the text. Citations are also linked where they appear in the judgment. The count shows how many other judgments on BharatTax rely on the same authority.

Income Tax Appellate Tribunal, “SMC”, BENCH MUMBAI

Before: SHRI R.C.SHARMA, AM

For Appellant: Shri Haresh P. Kenia
For Respondent: Shri S.K. Mitra
Hearing: 06/09/2017Pronounced: 25/09/2017

आदेश / O R D E R PER R.C.SHARMA (A.M):

1.

This is an appeal filed by the assessee against the order of CIT(A)- 47, Mumbai dated 30/11/2016 for A.Y.2012-13 in the matter of order passed u/s.143(3) of the IT Act.

2.

In this appeal, assessee is aggrieved for addition of Rs.1,15,402/- towards expenses debited to Profit and Loss account which was not claimed in the return of income filed.

3.

Rival contentions have been heard and record perused. From the record, we found that the expenses totalling Rs.1,15,402/- was incurred by assessee consist of legal expenses of Rs.6,000/-, Maintenance Charges of Rs.51,053/-, Rent of Rs.18,000/-, Service charges of Rs.27,179/-, Telephonic Expenses of Rs.9,974/-, Service Tax of M/s. Robert Mclean Consultants Pvt. Ltd., Rs.2,801/- and depreciation of Rs.395/-. It is submitted that the above expenditure was paid out of the available cash in hand. It is claimed that the aforesaid expenditure was in the nature of establishment expenses incurred in order to maintain the company and to run the organisation 4. On the plea that there was no purchase and sale transaction during the year, the AO disallowed assessee’s claim of expenses. I found that these expenses were in the nature of establishment expenses to keep the assessee company alive and these are the bare minimum expenses. Nowhere the AO has doubted the genuineness of expenses actually incurred.

5.

In the following judicial pronouncements, it has been held that bare minimum expenditure incurred to keep the assessee company alive, notwithstanding the fact that during the year there are no purchase and sale. These expenditures are required to be allowed.  Preimus Investment and Finance Ltd., vs. DCIT  Delhi High Court in case of ITA No.530/2011 dated 16.12.2011 between CIT vs Integrated Technologies Ltd.,  CIT vs. Anita Jain 214 taxation 180 (Delhi)/281 taxman 73.  KNP Securities Pvt. Ltd., vs. ACIT 33 DTR 210 Mumbai / 127 TTJ 338  Shingar Lamps Ltd., vs. ACIT 150 Taxman 17 Amritsar.

6.

Looking into the nature of expenses and the quantum incurred, I do not find any merit for the disallowance on these expenditures. Accordingly, AO is directed to delete disallowance.

Recent GST High Court judgments

Search GST case law →