2014 (2) TMI 1236 - AT - Income Tax

Assessment of business profits - income declared during survey and consequent disallowance of business expenses - Held that - Disallowance of business expenses is covered by the decision of the Tribunal in the case of other group concern in the case of Shrreshay Engg. Pvt. Ltd. 2014 (1) TMI 876 - ITAT MUMBAI wherein the Tribunal has held that the expenses are to be allowed by AO after verification as AO and the Ld.CIT(A), however, misconceived the claim of the assessee for the said expenses as that of against the additional income declared during the course of survey and made disallowance of the said expenses on the basis of this misconception without considering or examining the said claim on merit being the claim for regular business expenses of post survey period against regular business income. Allowability of set off of the brought forward business losses and unabsorbed depreciation of the earlier years - Held that - The present assessee has moved an application u/s 154 before the AO for considering the said claim, which is not disputed by the Revenue, we, following the aforementioned decision of the earlier years being assessment years 2005-06 and 2006-07, direct the AO to dispose of the application filed by the assessee u/s 154 expeditiously without any further delay

Summary

Issues:
1. Disallowance of business expenses and set off of brought forward business losses and unabsorbed depreciation.

Analysis:
1. The appeal was against the order of the Ld.CIT(A)-22, Mumbai for the Assessment Year 2007-08. Ground No. 1 was not pressed by the Assessee. Ground No. 2 related to the assessment of business profits at Rs. 30 lakhs and disallowance of business expenses. Ground No. 3 concerned the disallowance of set off of brought forward business losses and unabsorbed depreciation of earlier years.

2. The assessee, a company engaged in construction business, declared a business profit of Rs. 30 lakhs during a survey. The AO disallowed business expenses and set off of losses and depreciation. The Ld.CIT(A) upheld the AO's decision. The Tribunal referred to a similar case where expenses were allowed after verification. The Tribunal directed the AO to allow the business expenses as regular expenses after verification, similar to the previous case. Ground No. 2 was allowed for statistical purposes.

3. Regarding the set off of brought forward losses and unabsorbed depreciation, the Tribunal directed the AO to dispose of the application filed by the assessee expeditiously, following a similar case where the AO was directed to consider the claim. Ground No. 3 was allowed for statistical purposes. Ground No. 4 was deemed consequential and did not require adjudication.

4. The appeal filed by the Assessee was allowed for statistical purposes. The order was pronounced on February 26, 2014.