2011 (8) TMI 1338 - AT - Income Tax

Summary

Issues involved: Assessment of expenses as business loss u/s.143(3) for AY 2004-05 and disallowance of expenses for AY 2006-07.

Assessment Year 2004-05:
The appellant, a wholly owned Company of a foreign Company, claimed expenses disallowed by the Assessing Officer as "income from other sources" instead of business expenses. The appellant argued that all expenses were for business activities and should be considered as business loss. The ITAT found in favor of the appellant, stating that the Assessing Officer's interpretation was faulty and biased, directing confirmation of the loss as a business loss.

Assessment Year 2006-07:
The Assessing Officer disallowed various expenses without basis, including travelling, conveyance, legal and professional charges, and depreciation on assets. The ITAT held that the disallowances were based on misinterpretation of facts and directed the Assessing Officer to delete the disallowances, as the expenses were indeed incurred for the business of the assessee. The appeals for both assessment years were allowed by the ITAT.

This judgment by the Appellate Tribunal ITAT CUTTACK addressed the issues of assessing expenses as business loss for AY 2004-05 and disallowance of expenses for AY 2006-07. The ITAT found in favor of the assessee in both cases, emphasizing that all expenses were incurred for business purposes and should be allowed as business loss, overturning the decisions of the lower authorities.