WESTERN EXPRESS INDUSTRIES LTD,MUMBAI vs. ITO RG 8(3)(4), MUMBAI

The assessee is aggrieved by the decision of learned CIT(A) in confirming the disallowance of ` 4,10,959/- made by the Assessing Officer.

We have heard the parties and perused the record. The assessee had claimed loss of ` 4,10,539/- in the return of income filed by it. The Assessing Officer noticed that the assessee has not carried any business during the year under consideration and hence he took the view that expenditure claimed by the assessee is not allowable. Accordingly, the Assessing Officer disallowed aggregate amount of expenditure of ` 4,10,959/- claimed by the assessee. Learned CIT(A) also confirmed the same and hence the assessee has filed this appeal before us.

Learned AR placed reliance on the order dated 1.7.2015 passed by the Coordinate Bench in assessee’s own case relating to A.Y. 2009-10 and 2010-11 and submitted that the Coordinate Bench has allowed the expenditure claimed by the assessee in the above said years.

On the contrary, learned Departmental Representative submitted that the assessee’s claim relating to A.Y. 2001-02 was originally allowed by the Tribunal. The Coordinate Bench of the Tribunal has followed the said decision for deciding an identical issue in A.Y. 2009-10 & 2010-11.

Learned Departmental Representative submitted that the assessee has not been carried on any business since 2001-02 onwards and hence the case of the assessee cannot be treated as the case of temporary lull in the business. Accordingly, prayed that the order passed by learned CIT(A) should be confirmed.

We have heard the rival contentions and perused the record. We find merit in the submissions made by learned Departmental Representative. The assessee had stopped the business in the year near to AY 2001-02 . Hence the issue of allowing expenditure, in the absence of any business activity came to the consideration of the Tribunal in A.Y. 2001-02 and the claim was allowed. In AY 2009-10 & 2010-11, the co-ordinate bench of Tribunal has allowed the claim of the assessee by following the decision rendered in AY 2001-02. However, we are of the view that the facts that existed in AY 2001-02 cannot be said to exist during the year under consideration. The settled proposition is that the expenditure of a business is allowable as deduction, even if no business activity is carried on provided that the same was due to temporary lull in the business. However, in the instant case, the very fact that the assessee did not carry on business since 2001-02 onwards, i.e., almost for 11 years would show that the assessee has stopped its business completely. Under these set of fact, we are of the view that the assessee’s case cannot be considered to be the case of temporary lull in the business. In view of these

In the result, appeal filed by the assessee is dismissed.