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Before: SHRI N.K. SAINI & SMT. BEENA PILLAI
ORDER
PER BEENA PILLAI, JUDICIAL MEMBER:
The present appeal has been filed by the Revenue against the order of the ld. CIT(A)-IX, New Delhi vide his order dated 22/07/2014 for the A.Y. 2011-12 on the following grounds:
1. “Whether on the facts and circumstances of the case and in law, the ld. CIT(A) is right in allowing the expenses to assessee of Rs. 23,86,371/- including depreciation of Rs. 14,95,931/- ignoring the fact that no business activity has been performed by the assessee?
2. That the order of the ld. CIT(A) is erroneous and is not tenable on facts and in law.
That the appellant craves leave to add, alter, amend or forgo any grounds of appeal
either before or at the time of hearing.”
2. The brief facts of the case as recorded by the authorities below are as under: The assessee is a company engaged in the business of Real Estate. The assessee had filed its return of income for the year under consideration on 28/09/2011 declaring loss of Rs. 17,06,742/-. The case was selected for scrutiny and the assessment was completed on 30/01/2004 u/s 143(3) of the Act at an income of Rs. 6,79,630/-. The addition made by the ld. Assessing Officer included expenses including depreciation amounting to Rs. 23,86,371/-.
3. Aggrieved by the order of the ld. Assessing Officer the assessee preferred an appeal before the ld. CIT(A). The ld. CIT(A) held as under: “The Assessing Officer also hold that since there is no business activity during the year the income from other sources cannot be set off against business expenditure. Against this finding, the appellant submitted the copies of agreement entered with two vendors regarding property transactions. From the balance sheet as on 31.03.2011 it can be seen that in Schedule F there is stock of flats (Parasvnath Developers Ltd.) to the tune of Rs. 3,96,58,754/-. These transactions prove that the assessee was having establishment and incurring expenses for running his business of real estate. The Assessing Officer did not verify these facts. Since the business of the appellant was going on the depreciation claimed is allowable. Since the business has not been closed down and there is probability of earning profit in future because of efforts carried out during this year, the depreciation and business expenses should be allowable.”
4. Aggrieved by the order of the ld. CIT(A) the Revenue is in appeal before us.
We have heard both the parties and perused the records filed before us.
The ld. DR relies on the order passed by the ld. Assessing Officer.
The ld. AR on the contrary submitted that the real estate business of the assessee was set up in the year 2005. The assessee was actively involved in the real estate business till 2012. The ld. AR further submits that in the year under consideration the assessee has made an investment of Rs. 3.95 crores towards acquisition of land in Vasant Kunj at Delhi. The ld. AR submitted that there has been expenses for running its real estate business, which has not been disputed by the ld. Assessing Officer. The ld. AR supported the order passed by the ld. CIT(A).
From the records, we see that the assessee has submitted the copies of the agreement entered with two vendors regarding property transactions to the tune of 3.96 crores. The ld. Assessing Officer did not verify these facts and has disallowed the depreciation claimed by the assessee. We do not find any infirmity in the findings of the ld. CIT(A) that the assessee was having running business of real estate for which it had incurred expenses. It is also not disputed that the expenses incurred by the assessee was not for the purposes of its business. Thus, we uphold the findings of the ld. CIT(A). The grounds filed by the Revenue is thus, dismissed.