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Income Tax Appellate Tribunal, DELHI BENCH “SMC-II, NEW DELHI
Before: SHRI H.S. SIDHU
Assessee has filed this Appeal against the impugned Order dated 25.2.2014 passed by the Ld. CIT(A)-VI, New Delhi relevant to assessment year 2008-09 on the following grounds:-
“1. That the order passed by Ld. CIT(A) partly sustaining the order of the AO is bad in law and on the facts of the case and is liable to be set aside.
That the Ld. CIT(A) has erred in only partially allowing the claim of expenditure amounting to Rs. 2,99,545/- under the head Profit & Gains from Business and Profession on mere assumptions and without any basis.
That the Ld. CIT(A) has erred in treating 50% of the expenditure claimed by the appellant as personal in nature without giving any show cause to the appellant in this regard, though he himself accepted, while passing order, that the expenditure as debited in P&L account to the extent of Rs. 5,99,590/- are hereby allowable u/s. 57(iii) instead of Section 37 of the Income Tax Act, 1961.
That the order passed by Ld. CIT(A) is against the principles of natural justice.
That the appellant craves leave to add, to alter, to withdraw, to amend any of the above grounds of appeal before or at the time of the hearing of the appeal.
2. The brief facts of the case are that the assessee filed its return of income on 31.3.209 declaring an income of Rs. 1,54,110/-. The case was processed u/s. 143(1) of the I.T. Act, 1961. Case was subsequently selected for scrutiny under CASS. Notice u/s. 143(2) of the I.T. Act was issued on 3.8.2009 and in response thereto the Assessee’s AR attended the proceedings from time to time. The assessee company was incorporated on 13.8.2003 with the purpose of manufacturing, processing, import, export of fibers and yarns etc. During the year no such business activity was carried out, as per AR’s submission dated 15.11.2010 before the AO. AO observed that assessee had interest income, profit from sale of mutual fund, dividend income and income from capital gains. Accordingly, AO was asked to justify the business exigency of various expenses claimed in profit and loss account, amounting to Rs. 5,99,590. The AR of the assessee submitted its reply, but AO was not satisfied with the reply and observed tzat there appears to be no business exigency for the expenses claimed and the nature of income earned i.e. interest income, capital gain on sale of mutual funds and dividend. Such income being the in the nature of income from other sources has no correlation with the expenses claimed by the assessee. AO, therefore, disallowed this amount and added to the income of the assessee vide his order dated 21.12.2010 passed u/s. 143(3) of the I.T. Act, 1961.
3. Against the aforesaid assessment, the assesee appealed before the Ld. CIT(A), who vide his impugned order dated 21.12.2010 has partly allowed the appeal and restricted the addition to 50% and gave the relief of Rs. 2,99,545/-.
4. Aggrieved with the order of the Ld. CIT(A), Assessee is in appeal before the Tribunal.
5. At the time of hearing, Ld. Counsel of the assessee has filed a Paper Book containing pages 1 to 19 having copy of Form of Appeal (Form No. 36); Grounds of Appeal; copy of order dated 25.2.2014 passed by the Ld. CIT(A); copy of Appeal (Form No. 35) alongwith grounds of appeal filed before Ld. CIT(A); copy of order dated 21.12.2010 passed by the ITO; receipted challan of fee and power of attorney. He stated that in the assessment order for the AY 2006-07 the AO has allowed the similar expenses vide his order dated 10.9.2008 passed u/s. 143(3) of the I.T. Act, 1961. He further stated that AO followed the similar practice in the succeeding assessment year also. He further draw my attention towards the ITR 2007 and 2009-10 wherein the assessee has claimed such expenses and filed the computation thereof. Therefore, he requested that following the consistent view in the preceding and subsequent assessment years, the disallowance in dispute may be deleted and appeal of the assessee may be allowed accordingly.
On the other hand, Ld. DR relied upon the order of the authorities below and requested that the same may be upheld.
I have heard both the parties and perused the records available with me especially the orders of the revenue authorities and the Paper Book containing pages 1 to 19 having copy of Form of Appeal (Form No. 36); Grounds of Appeal; copy of order dated 25.2.2014 passed by the Ld. CIT(A); copy of Appeal (Form No. 35) alongwith grounds of appeal filed before Ld. CIT(A); copy of order dated 21.12.2010 passed by the ITO; receipted challan of fee and power of attorney. I also find that in the assessment order for the AY 2006-07 the AO has allowed the similar expenses vide his order dated 10.9.2008 passed u/s. 143(3) of the I.T. Act, 1961. I have also seen the ITR for the assessment year 2007-08 and 2009-10 alongwith computation thereof wherein he shown the similar expenses and no addition has been made by the AO in this regard.
After perusing the aforesaid documents, I find that the AO has not made any disallowance on the issue in dispute. Therefore, following the consistent view adopted by the Department, in the preceding and in subsequent assessment years, as aforesaid, the addition made by the AO and partly restricted by the Ld. CIT(A) to the extent of Rs. 2.55.545/- in the present assessment year 2008-09 is hereby deleted and accordingly, the appeal of the assessee is allowed.
In the result, the Appeal filed by the Assessee stands allowed.
Order pronounced in the Open Court on 20/01/2017.