9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (3) TMI 1053 - HC - Income TaxAllowable business expenses - Expenses pertained to the period after setting up of business - Commissioner held that the assessee company had started deploying skillful personnel and after 07.07.2008 it was fully equipped to mount the operation of the business - HELD THAT - CIT(A) while allowing claim of the assessee with certain directions, had relied on the decision of the Coordinate Bench in the case of Dhoomketu Builders Development Pvt. Ltd. 2011 (11) TMI 193 - ITAT DELHI wherein it was held that where the assessee had deployed skillful personnel to carry on his business by providing technological and personnel support then that expenditures have to be allowed as business expenses. Appeal is dismissed being devoid of any merit.
Issues:
1. Appeal against the order of the Income Tax Appellate Tribunal dated 30.10.2019 for the assessment year 2009-10. 2. Allowability of business expenses debited by the assessee. 3. Disallowance of expenses by the Assessing Officer. 4. Appeal before the Commissioner of Income Tax (Appeals)-1 and subsequent directions. 5. Appeal before the Income Tax Appellate Tribunal, Delhi Bench. 6. Findings and decisions of the Tribunal. 7. Legal principles applied in allowing business expenses. Issue 1: The revenue appealed against the order of the Income Tax Appellate Tribunal dated 30.10.2019 for the assessment year 2009-10. The Tribunal dismissed the appeal, affirming the findings given by the Commissioner of Income Tax (Appeals)-1, Gurgaon, regarding the allowance of expenses as revenue expenditure for the period from 07.07.2008 till 31.03.2009. Issue 2: The respondent-assessee, a company providing support to the food processing and dairy industry, filed its return declaring total income at Rs. Nil after claiming losses. The business expenses debited by the assessee were scrutinized, and certain expenses were treated as revenue expenses, including rent, legal expenses, and communication expenses. Issue 3: The Assessing Officer disallowed expenses amounting to Rs.10,28,95,398/- after deducting business expenses of Rs.49,35,784/- from the total claim. The Commissioner of Income Tax (Appeals)-1 partially allowed the appeal, directing the Assessing Officer to obtain details of the disallowed expenses pertaining to the period after the establishment of the business. Issue 4: The Commissioner observed factual errors in the assessment order, including discrepancies in the rent paid for the registered office. The Assessing Officer was directed to rectify the mistakes and verify the figures from the Profit & Loss Account. Issue 5: The revenue appealed before the Income Tax Appellate Tribunal, Delhi Bench, challenging the order of the Commissioner of Income Tax (Appeals)-1. The Tribunal dismissed the appeal, upholding the findings that the assessee was entitled to claim expenses as revenue expenditure for the relevant period and directing the Assessing Officer to allow the expenses as a deduction. Issue 6: The Tribunal affirmed the decision of the Commissioner of Income Tax (Appeals)-1, emphasizing that the Assessing Officer had to obtain details of the disallowed expenses for the specified period and allow them as deductions. The Tribunal also noted the earnings of the assessee in the subsequent financial year, which the revenue failed to controvert. Issue 7: The Tribunal based its decision on legal principles, citing the case of Dhoomketu Builders & Development Pvt. Ltd. vs. Additional Commissioner of Income Tax, wherein it was held that expenses incurred for deploying skillful personnel for business operations must be allowed as business expenses. The appeal was ultimately dismissed for lacking merit. This comprehensive analysis of the judgment delves into the issues of appeal, business expenses, disallowance, appellate proceedings, findings of the Tribunal, and the legal principles applied in allowing the expenses.
|
