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Income Tax Appellate Tribunal, MUMBAI BENCHES “SMC”, MUMBAI
Before: Shri Joginder Singh,
आदेश / O R D E R
The assessee is aggrieved by the impugned order dated 23/09/2014 of the Ld. First Appellate Authority, Mumbai. The only ground raised in this appeal pertains to disallowing expenses debited to the profit & loss account i.e. accounting charges (Rs.48,000/-), leave and license expenses (Rs.1,36,230/-), professional fee (Rs.59,144/-) and preliminary expenses of Rs.3,500/-.
During hearing of this appeal, the ld. counsel for the assessee Miss Niyati D. Mehta submitted that business expenses are allowable against income from business, u/s 28 of the Act as the assessee company carried out its business activity as per MOU and all the activities/expenses were routed through profit & loss account or balance sheet. It was also explained that salary remuneration to accounting staff, fee for professional work of ROC, documents registration charges and preliminary expenses were actually incurred during regular course of business for business purposes, thus, has to be allowed. On the other hand, the ld. DR, Shri A.K. Dhondial, defended the disallowance by inviting my attention to the reasoning and the facts contained in the impugned order.
2.1. I have considered the rival submissions and perused the material available on record. The facts, in brief, are that from the profit & loss account of the assessee company, the ld. Assessing Officer observed that the assessee credited Rs.1,89,000/- on account of leave and license charges, Rs.59,144/- as profession charges like audit, uploading ROC forms/expenses and Rs.17,978/- as ROC expenses etc. The ld. Assessing Officer disallowed the same.
On appeal, the ld. Commissioner of Income Tax (Appeals) affirmed the stand of the ld. Assessing Officer. It is noted that the ld. Assessing Officer as well as the ld. Commissioner of Income Tax (Appeals) disallowed the expenses on technical grounds. At the same time, the Assessing Officer as well as the ld. Commissioner of Income Tax (Appeals) has not disputed incurring of expenses, therefore, business expenditure has to be allowed. It is not the case of the Revenue that either the claim of the assessee is bogus or the same were not incurred by the assessee. It is noticed that these expenses were incurred for business purposes in normal course of business. Business has been defined in section 2(13) of the Act which includes any trade, commerce or manufacture or any adventure or concern, in the nature of trade, commerce or manufacture. These words are wide import, the underlying idea being of continuous exercise of an activity. The nature of expenses, claimed by the assessee, like profession fees, legal expenses, stamp duty, lease and licenses expenses, ROC expenses are necessary for smooth running of the business. A business is commenced as soon as an essential activity of that business started. Since, the assessee was doing his business in accordance with MOU and not disputed by the Revenue, therefore, the expenses so incurred by the assessee seems to be justified, consequently, the same are allowed.
Finally, the appeal of the assessee is allowed.
This order was pronounced in the open Court in the presence of ld. representative of both sides at the conclusion of the hearing on 04/01/2016.
Sd/- (Joginder Singh) �या�यक सद�य / JUDICIAL MEMBER मुंबई Mumbai; �दनांक Dated : 04/01/2016 f{x~{tÜ? P.S /�नजी स�चव आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. आयकर आयु�त(अपील) / The CIT, Mumbai. 4. आयकर आयु�त / CIT(A)- , Mumbai 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, मुंबई / DR, ITAT, Mumbai 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER, स�या�पत ��त //True Copy//