SIMTO PROPERTY DEVELOPRS LTD,THANE vs. ITO WD 5(3)(2), MUMBAI

Since, the grounds raised

The Ld CIT (A) has further erred in upholding the decision of the Ld AO to disallow total business expenses amounting to Rs. 1,70,280/- of the appellant company on the pretext of there being no business during the year merely on the basis of doubt, surmises and conjectures. 4. Without prejudice to other grounds, in view of the facts and circumstances of the case and in law, the Ld CIT (QA) has further erred in upholding the income derived from an integral commercial activity of letting out furniture etc along with a part of factory premises as income from house property.” 3. At the outset, Ld Counsel for the assessee started his argument relating to the appeal for the AY 2001-02. Summarizing the grounds, Ld Counsel for the assessee mentioned that ground no.1 is legal in nature and the same can be dismissed. After hearing the Ld Representatives of both the parties the ground no.1 is dismissed. 4. Regarding ground no.2, Ld Counsel for the assessee submitted that this is the case of denial of depreciation on the fixed assets on the ground of assessee’s failure to use those assets for business in the year under consideration. Further, Ld Counsel for the assessee submitted that by seeing mere absence of sales and purchases in the P & L Account, the Assessing Officer came to the conclusion, which is confirmed by the CIT (A), that the assessee has not done any business activity in the year under consideration. In the process, Revenue Authorities failed to appreciate that the assessee made efforts to make sales. Relying on the page 51 of the paper book, which is an LC opening with IndusInd Bank Limited and in response to the sale of goods, Ld Counsel for the assessee submitted that the efforts were made by the assessee to make sales although the same did not materialize eventually. He also mentioned that the assessee made sale of scrap and earned income in the year under consideration. Referring to the building and other expenditure incurred by the assessee, Ld Counsel for the assessee mentioned that the said premises were used for parking the closing stock worth about Rs. 4 lakhs. Further, he submitted that the assessee has changed its business activity in the year under consideration as per the Memorandum of Association and the effects of the same are seen in the succeeding assessment years. Further, Ld Counsel for the assessee brought our attention to various documents in the paper book to demonstrate the business activity, which materialise in the later times. Bringing our attention to the expenditure amounting to Rs. 1,70,280/-, Ld Counsel for the assessee mentioned that the said expenditure is basically related to the overheads and minimum requirements for up keeping and management of the existing assets and office activities. In such circumstances, as per the Ld Counsel for the assessee denial of the depreciation and expenditure is not in tune with the provisions of the Act. 4. On hearing both the parties, we find it is the decision of the AO and the CIT