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TMI Blog2018 (6) TMI 1118X X X X Extracts X X X X X X X X Extracts X X X X ..... ent year 2012-13 on the following grounds:- 1. Whether on facts and in circumstance of the case, the Ld. CIT(A) is legally justified in deleting the disallowance of ₹ 55}1,01 u/s)7(1) of the Income Tax Act, 1961 (the Act) without considering an admitted fact that the assessee had not carried out any business operation during year under consideration and the siness of the assessee was closed? 2. Whether on facts and in circumstances of the case, the Ld. CIT(A) is legally justified in deleting the disallowance of ₹ 557 u/s 37(1) of the Act by solely relying on self-serving and new claim of -the assessee that business was temporarily suspended and without recording verifiable findings that the business of e assessee was not discontinued but was actually temporarily suspended? 3. Whether on facts and in circumstances of the case, the Ld. CIT(A) is legally justified in deleting disallowance of ₹ 55,71,019/0 by accepting selfserving new claims and documents filed by the assessee even when the assessee had not fulfilled conditions as laid down under Rule 46A of the Income Tax Rule, 1962 (the Rule) and without providing opportunity of being heard to the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO as the assessee has not been able to file the details and justification that when there was no business activities, how these expenses have been incurred in relation to the business of the assessee. The assessee has debited ₹ 23,28,527/- as loss due to the defected material. When no business has been done, how this loss has occurred. Further in absence of any business activity, why the expenses on tour and travelling has been incurred and why it should be allowed. Further the assessee has not given any reason why the finance cost of ₹ 5,79,999/- has been incurred in absence of business activity. Similar is the case for other expenses also and as such cannot be allowed in the absence of any business activity. Accordingly, the AO held that no business activity has been done by the assessee during the year and the assessee has not been able to justify that the expenses have been incurred wholly and exclusively for the purpose of business, the expenses claimed by it amounting to ₹ 55,71,019/- were not allowed. AO further observed that during the year the assessee has declared ₹ 15,50,510/- as income from other operating revenue . The assessee has stated tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received u/s 244A of the Act (Interest on Income tax refund). Finally, it is seen that the ground at (w) is general in nature and there was no specific submission during the course of appeal. Hence, it is not considered in this order. 5.1 Coming to the grounds of appeal from (a) to (t) above relating to the disallowances of expenses in the impugned order; it is mentioned 'therein, inter alia, ... The assessee vide order sheet' entry dated 30/12/2014 was required to show cause as to why the expenses claimed be not disallowed in absence of any business activity during the year. The assessee submitted vide letter dated 30/1212014 that the company was forced to stop its operations due to taking over of its assets by the bank. However, as the company was carrying on its business activities such. as recovery of its dues from the debtors and payment to be made to creditors, therefore, the company had to run its operations. The company had incurred expenses to file legal cases against bank and all other expenses of routine and has to be allowed as being incurred in the routine course of business. 2.2 The contention of the assessee is not acceptable as the assessee has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . However, on the submissions and arguments taken during the course of the appellate proceedings, it is observed that the -appellant's contention with regard to carrying off of business activities during the relevant previous year is borne out from the available records. Suspension of carrying, on does not necessarily amount to discontinuance of the business - A company may not obtain or be able to execute, a single business contract for months and yet it may be deemed to carry on its business, if during the period of lull and inactivity it is kept alive and if it retains its registered office and holds meetings. It is not necessary that a business to be in existence should have work all the time. There may be long intervals of inactivity and a concern may still be a going concern, though it may, for some time, be quiet and dormant. The mere fact that a business has not been able to obtain a contract and the business has for some time been in that sense dormant would not mean that it has ceased to exit, if the, assessee continues to maintain an establishment and incur expenses in the expectation that work would come and the business would be, successful [Ref. Bharat's Direc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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