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Issues Involved: Appeal against deletion of addition of expenses claimed for business purposes from rental income u/s 24(a) for assessment year 2005-06.
Summary: 1. Grounds of Appeal: Revenue appealed against deletion of Rs.23,27,741/- expenses claimed for business purposes from rental income, despite no business activities carried out during the year. 2. Assessee's Claimed Income and Expenses: Assessee, a property developer and share trader, claimed income from rent and other sources, while also claiming various expenses including legal expenses and property maintenance expenses. 3. AO's Findings: AO noted no business activity during the year, leading to disallowance of claimed expenses as work in progress, based on the company's financial statements and lack of business transactions. 4. Appeal to CIT(A): Assessee argued that expenses were ordinary business expenses necessary to maintain business operations, citing similar treatment in subsequent years and legal precedents supporting deduction of such expenses. 5. CIT(A)'s Decision: CIT(A) allowed the claimed expenses as legitimate business expenses, emphasizing the necessity of certain expenses to keep a company operational, regardless of business transactions during the year. 6. Tribunal's Decision: Tribunal found lack of detailed evidence and exercise by lower authorities, remanding the matter back to the AO for a fresh decision after providing the assessee with a fair opportunity to present their case. 7. Conclusion: The appeal of the revenue was allowed for statistical purposes, with the matter being remitted back to the AO for a fresh decision in accordance with the law.
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