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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 ..... e 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 Rs. 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? 4. Whether on facts and in circumstances of the case, the Ld. CIT(A) is legally justified in not upholding the addition of Rs, 15,50,5101 under the head of 'income from other sources' on account of one-time settlement with, the bank related to payment of interest by ignoring the provisions of section 56(1) of the Act and even when no business activities were taken place during the year? 5. That the appellant craves leave to add, alter, amend or forgo any ground(s) raised above at the time of the hearing. 2. The brief facts of the case are the assessee has filed the return of income declaring loss of Rs. 40,20,508/- on 28.9.2012. Later on, the case of the assessee was selected for scrutiny through CAS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O 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 Rs. 55,71,019/- were not allowed. AO further observed that during the year the assessee has declared Rs. 15,50,510/- as income from 'other operating revenue'. The assessee has stated that as the company could not repay loans taken from banks, one time settlement was made with the bank and the waived off amount is shown as other operating revenue. The same is not from business activity and as such this amount is taken as 'income from other sources' and taxed as such. Accordingly, the AO assessed the income of the assessee at Rs. 16,71,660/- vide order dated 05.01.2015 passed u/s. 143(3) of the I.T. Act, 1961. 3. Against the aforesaid assessment order, the assessee appealed before the Ld. CIT(A)-39, New Delhi, who vide his impugned order dated 30.01.2017 has partly allowed the appeal of the assessee and deleted the additions in dispute. 4. Aggrieved with the impugned order, the Revenue is in appeal before the Tribunal. 5. At the ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rying 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 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 RS.23,28,527 as loss due to 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 & travelling has been incurred and why it should be allowed. Further the assessee has not given any reason why the finance cost of Rs. 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 absence of any business activity. 2.3 In view of the fact that no business activity has been done by the assessee during th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Direct taxes Law & Practice 8th Edition 2016 page 202). A similar issue was decided by ITAT Kolkata in Akarsh Printers Ltd. Kolkata vs. Department of Income Tax I.TA No. 2279/(Kol)/2007 dated19/03/2010, wherein it was held, inter alia, simply on the reason that there was temporary cessation of business, the A.O. was not justified in disallowing the loss incurred by the assessee. In this view of the matter, we upheld the order of the Ld. C.I.T.(A) on this issue and this ground of the revenue is rejected. Also, the concept of temporary lull In business was considered and agreed to in CIT vs Integrated Technologies Ltd. ITA No. 530/2011(Del) dated 16/12/2011. This decision has been affirmed by the Hon'ble Supreme Court which dismissed the Revenue's SLP. 5.4 I am therefore inclined to agree wi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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