RARE ROSE PREMSIES P. LTD,MUMBAI vs. ITO 7(2)(1), MUMBAI

At the outset, ld. AR placed on record order of the Tribunal in assessee’s own case for the assessment year 2008-09, dated 10-5-2013, wherein exactly similar issue was decided in favour of the assessee after having the following observation :- As regards the issue raised in ground No. 2, the Id. Counsel for the assessee has submitted before us that the expenses in question were incurred by the assessee to comply with the statutory requirements as the assessee is a Private Limited Company. He has contended that the expenses so incurred were very .minimal to run any corporate body and as the same were incurred for the purpose of business, they are allowable as deduction under the head "profits and gains of business or "profession". We find merit in 2 this contention of the Id. Counsel for the assessee in view of the fact that the business of the assessee company is that of letting out properties owned by it and the same was very much carried on in the year under consideration. No doubt, the income from letting out is chargeable to tax under the head "income from house property as per the specific provisions contained in the Income Tax Act but the fact remains that the assessee was engaged in the business during the year under consideration in its capacity as Private Limited Company and the expenses incurred to maintain its status as a company and to comply with the statutory requirements were wholly and exclusively for the purpose of the . said. business. We are therefore of the. view that the expenses incurred by the assessee to maintain and run the corporate body are allowable as deduction under the head "profits and gains of business or profession" as claimed by the assessee. In that view of the matter, we delete the disallowance made by the AO and confirmed by the ld. CIT(A) and allow ground No.2 of the assessee’s appeal.”

I had carefully gone through the orders of the Tribunal as well as orders of the lower authorities during the year under consideration. As the facts and circumstances are exactly similar, respectfully following the order of the Tribunal in assessee’s own case, grounds taken by the assessee is allowed.

In the result, appeal of the assessee is allowed. Order pronounced in the open court on this 29/07/2016.