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TMI Blog2017 (11) TMI 903X X X X Extracts X X X X X X X X Extracts X X X X ..... been brought on record to prove the existence of business of assessee in the appellate order except a finding that assessee has made advance for the purchase of property. In our considered view, the advance shown by assessee does not ipso facto prove that assessee is carrying on business. Thus in our considered view the fact that the assessee is running a business needs to be established. Therefore we are inclined to set aside the impugned order and restore the issue back to the file of Ld. CIT(A) with a direction to find out the question of fact as to whether the business of assessee is in existence or not. While doing so, the Ld. CIT(A) shall give a due and fair opportunity of hearing to the assessee as well as call for the remand report from the AO in accordance with law and shall decide the matter by way of a speaking order in accordance with law. Hence, this ground of Revenue’s appeal is allowed for statistical purpose. - ITA No.2097-2100/Kol/2013 - - - Dated:- 13-10-2017 - Shri Aby.T Varkey, Judicial Member And Shri Waseem Ahmed, Accountant Member For The Assessee : None For The Respondent : Shri Saurabh Kumar, Addl. CIT-DR ORDER PER BENCH:- T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cated in Delhi on rental basis and part of the property was being used as administrative office. The income from the partly let out property i.e. Delhi property was also offered to tax under the head house property . 5.1 The assessee besides house property income also claimed to carry on the business of building construction as evident from object clause of Partnership deed which reads as under:- That the business of the firm is and shall be to deal in Real Estate, let out properties act as commission agent, builders, reltors, cultivator, grower, producer, harvester, importer, exporter, trader, act as wholesalers, commission agents etc. of agriculture produce, commodity, crops, herbs and allied agricultural activities. However, the partners, may by mutual consent, take up any other line of trade. The assessee in its balance-sheet as on 31.03.2004 has shown advance payment for certain properties at ₹1,17,20,000/- only. The assessee in its profit and loss account has claimed expense of ₹31,41,251/- including the depreciation in respect of Delhi property and other fixed asset for ₹22,53,751/- only. 5.2 Therefore, the assessee in its income tax return ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all the expenses claimed by it was incurred in connection with the business only. During the course of assessment proceedings, AO nowhere has doubted the genuineness of such expenses but erred in treating the same as non-business expense. The AO erred treating the same as incurred against the house property income. Ld. CIT(A) after considering the submission of assessee deleted the addition made by the AO by observing as under:- it is seen that the real estate business is one of the dominant activities mentioned in the deed of partnership. It is also seen that the appellant has used its Vasant Vihar property of New Delhi for the purpose of its real estate business. From this Vasant Vihar property, the appellant has run his office for maintaining its real estate business. It is also found that the assessing officer has lost sight of the fact that the appellant firm has given advances for properties being lands and plots to GS ide and Dynasty Prop. P.L. amounting to ₹ 17,20,000/- and ₹ 1 Cr. Respectively. The aforesaid advances are reflected in the audited accounts of the appellant. This fact itself indicates that the appellant is in the business of real estat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of the Hon'ble Gujarat High Court, cited supra, and the decision of the Hon'ble Calcutta High Court, it is held that the expenses claimed by the appellant, are allowable. It also a fact that the assessing officer has not doubted the bona fide of the expenses claimed by the appellant. It is also an undisputed fact that the Delhi property on which depreciation has been claimed, is owned by the appellant and it has been used to run its office by the apape. Therefore, not only the expenses claimed by the appellant are allowable but also the depreciation claimed by it for its Delhi office, is allowable; as the said office has been used by the appellant for running its business of real estate. The claim of depreciation of the assessee relates to property at E-14/17, Vasant Vihar, New Delhi, owned by the assessee. all the fixed assets of the assessee are also installed at the office premises of the assessee as is evident from their very nature and these have been used for conducting the business of the firm. Hence it is held that the claim of depreciation of the appellant is admissible. Accordingly, the assessing officer is directed to delete the disallowance of ₹ 31,4,2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in existence. 8.1 It is the disputed fact that no income whatsoever has been shown by the assessee in the financial year which beginning from 2003-04 to 2005-06 and 2008-09 as evident from the order of Authorities Below. It is also disputed fact that assessee has shown various advances in its balance-sheet for the purchase of property as evident from the order of Authorities Below. But the disallowances were made by AO on the ground that there is no business activity carried out by assessee. Now the issue arises before us to adjudicate whether there is any business activity of the assessee or not. In our considered view it is a question of fact to establish whether the business of assessee is in existence or not. If yes it is very much eligible for deduction of the expense incurred by assessee. We note that the ld. CIT-A has simply accepted on the submission of the assessee and has come to the conclusion that the assessee is doing business activity. But no contrary evidence has been brought on record to prove the existence of business of assessee in the appellate order except a finding that assessee has made advance for the purchase of property. In our considered view, the adv ..... X X X X Extracts X X X X X X X X Extracts X X X X
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