2021 (2) TMI 603 - AT - Income Tax

Disallowance of business loss - necessary expenditure to be incurred by the assessee for closed business - HELD THAT - The assessee is unable to substantiate the expenditure thus claimed in Profit Loss Account with documentary evidences. No new material has been placed before us which would warrant us to deviate from the stand of Ld. CIT(A). The complete onus to substantiate the business expenditure was on assessee and despite being provided with ample opportunities to do the same, the assessee is unable to file the requisite details and documentary evidences. Accordingly, we see no reason to interfere with the impugned order. Ground No.1 stand dismissed. Adding same income twice - interest income - treating business loss as nil (wherein interest income is reflected) and then by considering under the head income from other sources - HELD THAT - Interest income has been added twice since the interest income was credited to Profit Loss Account while the same has separately been treated as Income from Other Sources. We are of the considered opinion that if interest income is excluded from profit loss account, the business loss would increase further. However, the same would still be not be allowable since the assessee has not substantiated any expenditure. The interest income has rightly been assessed under the head Income from other sources keeping in view the assessee s nature of business. Carry forward of business losses - This ground become infructuous in view of the fact that business losses as computed by the assessee have been held to be not allowable.

Issues: Delay condonation, Disallowance of expenses, Double addition of income, Carry forward of business loss.

Delay Condonation:
The appeal by the assessee contested the order of the Ld. Commissioner of Income-Tax (Appeals) for AY 2008-09. The registry noted a delay of 344 days in the appeal, attributed to business closure, changes in the board of directors, medical adversities of the director handling taxation matters, and lack of coordination between the advocate and Chartered Accountant. The delay was condoned based on supporting documents, and the appeal proceeded for disposal on merits.

Disallowance of Expenses:
The assessee, engaged in foreign exchange and tour & travel, claimed expenses of ?69.95 Lacs and a business loss of ?45.53 Lacs. Despite multiple opportunities, the assessee failed to provide necessary details and evidences to substantiate the claimed expenditure. Consequently, the business loss was disallowed, and total income was computed at ?5.29 Lacs. Even during appellate proceedings, no specific evidences were produced. The Ld. CIT(A) confirmed the disallowance, noting that the assessee failed to substantiate the claimed expenditure, leading to the dismissal of Ground No.1.

Double Addition of Income:
The assessee contended that the same income was added twice - first by treating business loss as nil and then considering it under the head of income from other sources. The Tribunal opined that excluding interest income from the profit & loss account would increase the business loss, but it would still be disallowed due to the lack of substantiated expenditure. The interest income was correctly assessed under the head of Income from Other Sources, considering the nature of the assessee's business. Ground No.3 was dismissed accordingly.

Carry Forward of Business Loss:
The assessee sought the carry forward of business loss from the previous year. However, since the computed business losses were held to be not allowable, the ground seeking carry forward became infructuous. The appeal was dismissed in terms of the Tribunal's order.

This detailed analysis of the judgment covers the issues of delay condonation, disallowance of expenses, double addition of income, and carry forward of business loss, providing a comprehensive understanding of the Tribunal's decision on each issue.

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