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TMI Blog2016 (7) TMI 1490X X X X Extracts X X X X X X X X Extracts X X X X ..... as borne out from the record are that the assessee in the year under consideration declared a total loss of Rs. 11,03,49,616/- on 30.09.2008. The assessee revised the said return on 04.05.2009 declaring a loss of Rs. 1,09,60,211/-. During the scrutiny proceedings, the assessee was required to furnish reasons for revising the return. Considering the same, the AO observed that in the revised return the assessee though has voluntarily disallowed certain expenses claimed in the return of income filed on 30.09.2008 however, at the same time new expenses to the extent of Rs. 63,89,741/- had been claimed. Referring to the profit and loss account and balance sheet filed alongwith the return it was observed that these expenses had been considered as Capital Work in progress and had not been charged as expenses. The assessee accordingly was required to submit an explanation for allowability of these expenses. The assessee explained that these expenses were incurred for maintaining its corporate structure, existence and preserving the assets-infrastructure. It was explained that the assessee had maintained all licenses etc for the operation of a hotel. Referring to the chart containing the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nished head-wise details of the revenue expenses claimed by it against the only main receipt of interest on income tax refund. I have gone through the said contentions and explanations. As found earlier, these claims are made by the assessee at a time when the entire business empire has tumbled down long back and no activity except various litigations as mentioned, have been going on. With the change in the control of the affairs now, the question that remains unexplained is whether he change over was business of the assessee in its old garb of management or whether the spoils of the past has anything to do with the futuristic adventures of the new controlling segment. The essential feature that the expenses should not only be incidental or necessary, but it should be "wholly, and exclusively" for the purpose of business, has not been satisfactorily brought out by the assessee after having spent so many words as quoted above. Therefore, only the following expenses are allowed:- Auditors remuneration of Rs. 11,000/- Bank Charges of Rs. 19,461/-, Insurance expenses of Rs. 12,445/- and Professional tax of Rs. 12,600/- Rest of other expenses claimed by the assessee company, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preserving and maintaining the hotel property owned by the appellant company are also bare minimum expenses required for maintaining the company and its assets. It was held in Birla Cotton Spinning & Weaving Mills Ltd. vs. CIT [64 ITR 568, 584 (Cal.)] that business includes day-to- day running of the business, preservation of business and protection of its assets and property from expropriation, coercive process or hostile title, payment of statutory dues and taxes and things incidental to carrying on business and expenses relating thereto were allowable business expenses. This ruling was affirmed by the Hon'ble Supreme Court [82 ITR 166]. I am also of the view that expenses on security, electricity and water are outright consumables and cannot be capitalized as these expenses do not add any value to the capital asset. Moreover, the loss returned by the appellant was reduced from Rs. 8,60,18,830/- filed in the original return to Rs. 1,09,60,211/- in the revised return and as such the claim of the expenses made by the appellant has not increased the loss returned. In these facts and circumstances of the case, the expenses claimed by the appellant are allowed. The disallowance o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. 129 ITR 58 (Allahabad); Nakodar Bus Services Pvt.Ltd. 179 ITR 506 (Pun.); Chennai & Co. Pvt.Ltd. vs CIT 206 ITR 616 (Bom.); Hindustan Chemicals Works Ltd. vs CIT 124 ITR 561; and Birla Cotton Spinning & Weaving Mills Ltd. vs CIT 64 ITR 568, 584 (Cal.). 8. We have heard the rival submissions and perused the material available on record. A perusal of the same would show that before the Assessing Officer, the assessee vide its letter dated 15.11.2010 has submitted that the expenditure incurred is for maintaining its corporate structure in existence and preserving the assets/infrastructure. The said explanation has been extracted in para 2.2 of the assessment order. It has also been submitted that the assessee company has claimed that it has maintained all necessary licenses etc. required for the operation of a hotel. We pause here and find on going through the material available on record and considering the arguments of the Ld. Sr. DR. that nothing has been brought on record by the Revenue to show that the facts as narrated by the assessee before the Assessing Officer and not disputed by the Revenue are no longer true or have all along been an incorrect assertion of facts. We f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsidering the fact that only a banquet Hall which had been completed at the relevant point of time which had been let out the claim of the assessee that income was from hotel business was not allowed. The Hon'ble Court came to the conclusion that the hotel business could not be said to have been set up simply because a banquet hall was let out because unless the hotel building was completed the Hon'ble Court held that the gamut of activities which a hotel is required to undertake cannot be said to have been ready for use and thus merely because the banquet Hall was ready in the incomplete hotel building the hotel business it was held could not have been set up. We find on consideration of the principle laid down therein, on the facts available and the issue under consideration by the Court it is seen that it has no bearing on the facts of the present case. 8.2. Accordingly considering the judicial precedents relied upon and the facts and circumstances of the case, we find that the decision arrived at in the peculiar facts and circumstances of the case fully supports the impugned order. A temporary lull at a point of time in the business of the assessee in the absence of any fact ..... X X X X Extracts X X X X X X X X Extracts X X X X
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