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TMI Blog2016 (9) TMI 205X X X X Extracts X X X X X X X X Extracts X X X X ..... al for Assessment Year 2005-06 in ITA No. 6024/Mum/2010 is being taken as the lead case. This appeal by the assessee is directed against the order of CIT(A)-23, Mumbai dated 24.05.2010, which in turn has arisen from the order passed by the Assessing Officer dated 18.12.2007 under section 143(3) of the Income Tax Act, 1961 (in short 'the Act'). 3. Although the assessee has raised multiple Grounds of appeal, but essentially the grievance is against the action of Income-tax authorities in holding that no business activity was carried out by the assessee, thereby denying the claim of loss determined on account of expenses claimed in the Profit & Loss account. To put it differently, the claim of the assessee is that the business loss determined ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se Property'. 5. In appeal before the CIT(A), assessee pointed out that the assessee was doing the business of trading in shares though the business of trading in polyester yarn, fabrics, etc. was temporarily facing a lull. It was also pointed out that so far as investment in stock-in-trade of shares were concerned, it was made in the past years out of funds available with the assessee by way of Partners' Capital, interest from deposits and interest bearing loans raised from time to time. In this manner, expenditure on interest was sought to be justified. With regard to the general administrative expenses claimed in the Profit & Loss account, it was pointed out that same were genuine. It was pointed out that though in the year under consid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment finalized u/s 143(3) of the Act dated 31.12.2004. It was, therefore, pointed out that though in the Assessment Year 2005-06 there are no sales undertaken, but it cannot be said that the business has been discontinued. With respect to the disallowance of expenditure on account of interest payments made to HDFC, Partners and other loans, the learned representative pointed out that a similar issue had come up before the Tribunal in Assessment Year 1998-99 and vide ITA No. 3167/Mum/2001 dated 15.3.2005, the claim of the assessee has been allowed. Even on this count, it was sought to be contended that there was no reason to disallow the expenditure on interest or even on general and other administrative expenses debited in the Profit & Loss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch a situation, the expenditure debited by the assessee in its Profit & Loss account deserves to be allowed. It is further pointed out that the expenses are of routine nature by way of salaries, bonus, staff welfare, books and periodicals, legal and professional charges, printing, stationery, etc. In our considered opinion, the factual matrix of the case supports the plea of the assessee that it is not a case of discontinuation or closure of business, but temporary lull in activity. During this period of lull or interregnum, the assessee is expected to continue maintenance of its business apparatus and for that purpose the expenses of general and administrative nature claimed by the assessee deserve to be allowed. In this context, we find t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accordingly, the order of CIT(A) is set-aside and the Assessing Officer is directed to recompute the total income accordingly.
11. Thus, the assessee's appeal for Assessment Year 2005-06 is allowed.
12. Insofar as assessee's appeal for Assessment Year 2006-07 is concerned, it was a common point between the parties that the facts and circumstances are pari materia to those considered by us in assessee's appeal for Assessment Year 2005-06, therefore, our decision in appeal of the assessee for Assessment Year 2005-06 shall apply mutatis mutandis in other Assessment Year also.
13. Resultantly, the captioned appeals of the assessee are allowed.
Order pronounced in the open court on 29th July, 2016. X X X X Extracts X X X X X X X X Extracts X X X X
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