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

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.

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.

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.

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.

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.