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Income Tax Appellate Tribunal, DELHI BENCHES : SMC-I : NEW DELHI
Before: SHRI R.S. SYAL
ORDER This appeal filed by the assessee is directed against the order passed by the CIT(A) on 31.7.2014 in relation to the assessment year 2010-11.
The only issue raised in this appeal is against the confirmation of disallowance of Rs.32,84,682/-, being expenses incurred by the assessee.
Briefly stated, the facts of the case are that the assessee claimed deduction for Salary/wages, Legal and professional expenses, Travelling and conveyance, Interest and Rent, etc., all totaling to Rs.32,84,682/-. The AO observed that the assessee is dealing in infrastructure (construction, erection, building, etc.) and development of industrial park. Since no business activity was shown during the year, the AO held that such expenses were not allowable. Following the view taken by him in preceding assessment years, he made a disallowance of Rs.32,84,682/-, which came to be affirmed in the first appeal.
I have heard the rival submissions and perused the relevant material available on record. It is observed from the assessment order that the AO, in making the disallowance of Rs.32.84 lac, has observed that: “the assessee has not been showing any business income for the last so many years and the business expenses claimed against such interest income were being disallowed by the Revenue in the preceding assessment years. Therefore, keeping in view the above reasons and also following the line of action taken in the preceding assessment years, the business expenses claimed against the interest income of Rs.32,84,682/- is being disallowed and added 2
back in the income of the assessee.” The ld. AR has placed on record a copy of the assessment order dated 22.12.2011 for the immediately preceding assessment year, namely, 2009-10, in which the AO disallowed 20% of total expenses. No addition was made for the A.Y. 2008-09 as no scrutiny assessment was done. The ld. AR did not raise any objection to the sustenance of disallowance of expenses at 20% as was done in the immediately preceding year. The ld. DR did not raise any serious objection to it. Since the AO himself has taken cognizance of his action taken in disallowing these expenses in preceding assessment year, following the view taken by him in the preceding year, I order to restrict the disallowance at 20% of total expenses.
In the result, the appeal is partly allowed.