9911796707
TMI Blog2021 (8) TMI 1080X X X X Extracts X X X X X X X X Extracts X X X X ..... in accordance with the law laid down by decided judgments no infirmity in the order passed by the Ld. CIT(A). - Decided against revenue. - ITA No. 143/CHD/2019 (Assessment Year : 2013-14) - - - Dated:- 23-7-2021 - SHRI N.K. SAINI, VICE PRESIDENT AND SHRI R.L NEGI, JUDICIAL MEMBER Revenue by: Smt. C. Chandrakanta, CIT Assessee by: Sh. Sudhir Sehgal, Advocate ORDER Per R.L. Negi, Judicial Member: The Revenue has filed the present appeal against the order dated 30.11.2018 passed by Commissioner of Income Tax (Appeals), Shimla [for short the CIT(A) ] for the assessment year 2013-14, whereby the Ld. CIT(A) has allowed the appeal filed by the assessee against the assessment order passed u/s 143(3) of the Income T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the same project. 3. The AO rejecting the contention of the assessee reduced the loss to 1,43,09,487/- and determined the business loss at ₹ 2,04,62,113/- including the business loss of ₹ 4,72,961/- for the AY 2011-12 and depreciation of ₹ 4,21,097/- for AY 2012-13. In the first appeal, the Ld. CIT(A) set aside the action of the AO and directed to delete the disallowance made by the AO. Aggrieved by the said findings of the Ld. CIT(A), the revenue has filed the present appeal. 4. The Revenue has challenged the impugned order passed by the Ld. CIT(A) on the following grounds: - (i) On the facts and in the circumstances of the case, the Ld CIT(A) has erred in holding that the business of the assessee was in ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... treating the loss of ₹ 5,58,66,211/- as business loss. Further since business of the assessee was in existence and the expenses were incurred in connection with the expansion of business, the Ld. CIT(A) has rightly directed the AO to delete the disallowance made by the AO. 7. We have heard the rival submissions of the parties and perused the material on record. The only grievance of the revenue is that the Ld. CIT(A) has wrongly held that professional expenses amounting to ₹ 3,47,72,000/- incurred by the assessee are allowable as revenue expenditure ignoring that the same were to be capitalized being preoperative expenses. The Ld. CIT(A) has set aside the findings of the AO holding as under: - In this case, the busines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in favour of the assessee holding as under: - Keeping the above in mind, we find that in the present case the contention of the assessee is that it had undertaken expansion of its existing business during the year. Note No. (Xiii) in the Notes to the Accounts, which is part of the Balance Sheet of the assessee, substantiates this fact. We find that this contention, of the assessee has not been rebutted by the AO / DRP. In the backdrop of this fact indirect expenditure incurred are to be treated for the purpose of carrying on business of the assesses and hence allowable. We find that the decision rendered by the Calcutta High Court ir the case of Kesoram Industries Cotton Mills Ltd. (supra) squarely applies to the assessee case wher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... project report or legal opinion regarding the viability of such project. This cannot, in our view, be considered as capital expenditure as, in that case, any legal expenses incurred by an assessee for taking any opinion on the desirability or feasibility of expansion of the business will not be allowable as deduction. Such expenditure is unmistakably connected with the running of the business. In view of the above it is held that indirect expenses would constitute Revenue expenditure only and would not become capital merely for the reason that such expansion was termed as new project. Therefore, we hold that the treatment given by AO to the sum of ₹ 8,18,69,666/- as capital is not in accordance with law and is hereby reversed. ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
