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TMI Blog2021 (9) TMI 1137X X X X Extracts X X X X X X X X Extracts X X X X ..... e : Shri Rohit Tiwari, Advocate For the Revenue : Shri R.K. Gupta, Sr. D.R. ORDER This appeal filed by the Assessee is directed against the Order dated 29.11.2019 of the Ld. CIT(A)-3, New Delhi, relating to the A.Y. 2014-2015. 2. Facts of the case, in brief, are that the assessee is a company and filed its return of income on 26.11.2014 declaring total income of ₹ 34,01,900/-. From the various details furnished by the assessee, the A.O. noted that assessee-company was incorporated in January 2010 and till A.Y. 2013-14 had done business of imparting training in English Communication Skills, Personality Development & Grooming and Interview Techniques. Assessee-Company had entered into a franchise agreement with M/s BAFEL Academy Pvt Ltd. (British Academy for English Language) for providing training in English Communication Skills etc. Due to reduction in number of students, Assessee-Company has stopped fresh batches in A.Y. 2013-14 onwards. During the year assessee-company earned interest income from investment in flat made with M/s. Vigneshwara Developments Pvt. Ltd. He further noted that the assessee had shown NIL Revenue from operations and shown income under the Head ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee submitted that all the expenses incurred by the assessee are for the purpose of business only and should be allowed. Referring the various expenses disallowed by the A.O. it was submitted that assessee is a Company and can only be run through natural persons. It was submitted that Salary Expenses of employees consist of one office Boy, one employee for official communication and one driver. Car Running & Maintenance Expenses refer to expenses incurred for visiting various persons to explore business opportunities. Car Insurance Expenses is linked with the Car used for official purpose. Entertainment expenses are also incurred for meeting with persons to generate business opportunities. Festival Expenses are also incurred to generate business opportunities to the assessee-company. Legal and Professional Expenses are incurred for various professional services taken from Chartered Accountants in connection with compliances of law. Miscellaneous expenses are incurred to maintain office of Assessee-Company. Repair & Maintenance expenses are also incurred to maintain the office of Assessee-Company. Telephone Expenses are incurred in connection with amount provided to staff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner of Income Tax, Circle 7(2), New Delhi. 3. That on the facts and circumstances of the case and in law, the Ld. CIT(A)/Ld. AO erred in making disallowance of all the business expenses incurred by the appellant during the year under consideration. In doing so, the Ld. CIT(A) / Ld. AO grossly erred in: 3.1. holding that there is no nexus between the expenses incurred by the appellant and income earned during the year; 3.2. disallowance of expenses stating that no business has been carried out by the appellant; 3.3. not appreciating the fact that the appellant was making efforts to run the business of imparting trainings during the year, however, could not find relevant batches to begin the same; and 3.4. Not appreciating the fact that expenses incurred by the appellant were routine in nature and were required to run the business. 4. That the Ld. AO/Ld. CIT(A) has erred in levying interest under section 234A, 2.34B and 234C of the Act. 5. That the Ld. AO/Ld. CIT(A) has erred on the facts and circumstances of the case and in law in initiating the penalty proceedings under section 271(1)(c) of the Act. 6. That above grounds of appeal are mutually exclu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the assessee failed to produce the complete books of account, bills and vouchers etc. I find the Ld. CIT(A) upheld the action of the A.O, the reasons of which have already been reproduced in the preceding paragraph. It is the submission of the Learned Counsel for the Assessee that it has not stopped its business and is maintaining an office and there is simply lull in the business activity. It is also his submission that due to less number of students the assessee thought it prudent not to admit any student for this year to minimize its expenses. According to him, merely because there is no business income during the year and when the assessee otherwise has maintained its corporate identity and has kept everything ready for reviving the coaching/teaching activities at right time, the Revenue Authorities should not have disallowed the expenditure merely on the ground that there is no business activity carried-out during the year or no business income has been shown during the year. 8.1. I find an identical issue had come up before the Hon'ble Delhi High Court in the case of CIT vs., Integrated Technologies Ltd., (supra). In that case the assessee filed its return of income on 18. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and machinery. These findings have not been challenged by the revenue as perverse. In fact, the allowance of the salary payments, staff welfare and repairs and maintenance expenditure by the CIT (Appeals) was not challenged by the revenue by filing any appeal on those points before the Tribunal and this aspect has been referred to by the Tribunal in para 9 of its order. Thus, the revenue had impliedly accepted the fact that the business was kept alive in the hope of revival and there was only a temporary lull in the business activities. If the assessee had purchased new plant and machinery and had also incurred repair expenditure of ₹ 1.23 lakhs in respect of the existing machinery, it is a fair and reasonable inference to draw that the assessee wants to keep the business alive and revive the same at the earliest opportunity. The assessee has also stated before the BIFR that after the change in the business scenario globally, the company is expecting to receive substantial orders for its products. Thus, the finding of the Tribunal that the business of the assessee was not closed is fully supported by facts on record which have not been challenged by the revenue. The other que ..... X X X X Extracts X X X X X X X X Extracts X X X X
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