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TMI Blog2022 (12) TMI 931X X X X Extracts X X X X X X X X Extracts X X X X ..... ng its business operations. CIT(A) clearly held that the assessee is not entitled to claim depreciation, establishment and general expenses and interest on loan as the assessee handed over electricity distribution and power system including all electrical system, sub-stations, overhead lines, service lines, office and associated facilities like lands, building, works, material, stores and plants in the area of its operation to MSEDCL w.e.f. 01-02-2011 which means the assessee has no business existed as on the end of F.Y. 2011 itself. The only contention has been made from 2011 to the year under consideration i.e. 2015-16, even before us, that the assessee s renewal application is pending before the competent appellate authority. When the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sses. Under scrutiny, notices u/s. 143(2) and 142(1) of the Act were issued to the assessee and in response to the said notices, the assessee filed details on points emerged for consideration. Further, he observed in para 3.1 of the assessment order that the assessee has shown rent income at Rs.5,73,565/- against which claimed depreciation , establishment expenses, interest on loan aggregating to Rs.5,30,10,197/- ( depreciation of Rs.4,63,50,607/- and establishment expenses of Rs.66,59,690/-). The AO show caused vide order sheet entry why such rental income should not be taxed under the head of Income from other sources and the claim of business loss and depreciation should not be disallowed since no business activity was carried out duri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee could not produce any evidence to prove the restoration of renewal of license for distribution of electricity. Further, he observed the assessee was received the user charges for the use of its assets which were handed over by the assessee to the MSEDCL. He confirmed the order of AO in assessing the rental income as income from other sources and the said rental income is received by the assessee as the owner of the said property, resultantly, confirmed the disallowance totaling to Rs.5,30,10,297/- and denied carry forward losses. 5. Before us, the ld. AR, Shri Abhay Sastri submitted that the application of assessee for continuation of its business is pending before the competent appellate authority, but however, he could not place ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cilities like lands, building, works, material, stores and plants in the area of its operation to MSEDCL w.e.f. 01-02-2011 which means the assessee has no business existed as on the end of F.Y. 2011 itself. The only contention has been made from 2011 to the year under consideration i.e. 2015-16, even before us, that the assessee s renewal application is pending before the competent appellate authority. When there is no business existed, in our opinion, the assessee is not entitled to claim deduction under the head Depreciation, Establishment and General Expenses and Interest on Loan and resultantly, carrying forward losses. For ready reference, let us examine the reasons recorded by the CIT(A) at para 7.2 of the impugned order is reproduc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und for allowing the depreciation on assets claimed by the appellant, as there was no existence of the business which was established by the AO to have been permanently closed and hence such depreciation was not allowable u/s. 32(1) of the Act. Further, for the identical reasons, the Establishment and General Expenses and Interest on Loans etc. claimed by the assessee appellant of Rs. 66,59,690/- was also not allowable as business expenses u/s. 37(1) of the Act as claimed by the appellant. In this connection, reference may be made to the case of S.P.V. Bank Ltd. v. CIT [1980] 126 ITR 773 (Ker) wherein the Hon'ble Kerala High Court held that in order to sustain a claim for deduction by way of business, expenditure must have been incurred ..... X X X X Extracts X X X X X X X X Extracts X X X X
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