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2020 (2) TMI 835 - ITAT MUMBAINon commencement of business - disallowance of business loss on the ground that business was not actually started on commercial basis - income from credit report is not shown - HELD THAT:- AO has not disputed these aspects. He is only drawing adverse inference that the assessee has not able to submit credit report to any customer during the period and has not shown any income therefrom - when the business has been set up and operation duly commenced after due approval of RBI, the Assessing Officer cannot deny the aspect of commencement of business only on the ground that income from credit report is not shown - there is no law that in business duly incurred business expenditure cannot be allowed if little income has been earned - CIT(A) has very elaborately considered his aspect. and held that business has been set up the assessee had duly shown that capital, regulatory permission, available infrastructure, employees are all available and in place. Assessing Officer is incorrect that the assessee has adopted colorable device. - Decided in favour of assessee. Disallowance of payment to related party u/s. 40A(2)(b) - HELD THAT:- This aspect that the said party is not related party u/s. 40A(2)(b) was never submitted by the assessee before the Assessing Officer. In fact when the Assessing Officer issued a questionnaire in this regard, the assessee has only explained the business exigency of expenditure. It had never explained that the said party is not falling under section 40A(2)(b). CIT(A)’s factual finding that the assessee was not holding specific stake in the said party and hence it was not falling u/s. 40A(2)(b) has not been examined by the Assessing Officer - remit this issue to the file of the Assessing Officer for factual verification. Accordingly the issue stands remitted. Disallowance of bonus u/s. 43B - HELD THAT:- CIT(A) has given factual finding that impugned payment have been done before the due date. This has not been disputed by the Revenue. CIT(A) is correct in holding that the Assessing Officer is not justified in sitting in the shoes of businessman and deciding whether the assessee’s employees are deserving bonus or not. In our considered opinion there is no infirmity in the order of learned CIT(A) in this regard. Hence, we uphold the same. Addition of share capital u/s. 68 - assessee is not giving financials and share capital is routed through Mauritius - HELD THAT:- It is settled law that powers and duty of learned CIT(A) are co-terminus with that of the Assessing Officer. If the Assessing Officer has failed to issue notices which are crucial, it was incumbent upon learned CIT(A) to himself ask for the financial and give findings about the same. We find that in absence of financial statement, only RBI approval alone cannot be said to have fully proved creditworthiness of the party. It is settled law that the Income Tax Officer is entitled to make necessary examination, which is considered necessary under the provisions of Income Tax law. Furthermore KAPURCHAND SHRIMAL VERSUS COMMISSIONER OF INCOME-TAX, AP [1981 (8) TMI 2 - SUPREME COURT] has expounded that it is the duty of the appellate authority to correct the error in the order of the authority below and remit the matter for reconsideration with or without direction unless prohibited by law. Accordingly, in the interest of justice, we remit this issue to the file of the Assessing Officer.
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