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TMI Blog2023 (10) TMI 648X X X X Extracts X X X X X X X X Extracts X X X X ..... r certain projects. Thus, the observations made by the AO that it is not in respect of business appears to be incurred as the performance guarantee was prior to the period on which the assessee was not fully operationalise his business. Therefore, the benefit of Section 37(1) is allowable to the assessee in light of the decision of Neo Constructo Construction Ltd.[ 2013 (7) TMI 851 - GUJARAT HIGH COURT] Ground No. 1 is allowed. Labour expenses paid to one staff doing administrative / accounting as well as miscellaneous office work - HELD THAT:- D.R. relied upon the assessment order and the order of the CIT(A). It is pertinent to note that there was no closure declared by the assessee of its entire business but certain business activit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ability was a contingent liability not brought in the books of the Appellant at the time of creation of such contingent liability and has been rightly taxed by the learned Assessing Officer u/s. 69C of the Act. Your Appellant submits that the disallowance is not warranted in the facts and circumstances of the case and the same should be directed to be deleted. 2. The Learned C.I.T. (Appeals) erred in law and on facts in confirming the disallowance of expenditure of Rs. 2,00,000/- incurred towards the salary paid by the appellant during the year under consideration on the ground that business of the Appellant is closed in the year 2008. It is submitted that there was lull in the business of the Appellant and it was never sought to be c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer completed the assessment under Section 143(3) on 29.11.2019 assessing total income at Rs. 9,25,340/- by disallowing the said expenditure as unexplained expenditure under Section 69C r.w.s. 115BBE of the Income Tax Act amounting to Rs. 12,00,000/-. 4. Being aggrieved by the assessment order the assessee filed appeal before the CIT(A). The CIT(A) dismiss the appeal of the assessee. 5. As regards Ground No. 1, the Ld. A.R. submitted that the assessee has claimed revenue expenditure of Rs. 10,00,000/- during the year under consideration as the assessee has given performance guarantee issued by the Indian Overseas Bank to Department of Telecommunication (DOT) and it has been invoked by DOT by sending letter to Indian Bank dated 24.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as well as miscellaneous office work and therefore, the same is related to the assessee s business itself. The Ld. A.R. submitted that the company was not closed too and the administrative as well as accounting of the assessee s business was operational during the period, therefore, the expenditure is revenue expenditure and the same should have been allowed. 9. The Ld. D.R. relied upon the assessment order and the order of the CIT(A). It is pertinent to note that there was no closure declared by the assessee of its entire business but certain business activities were going on from 2008 till 2016 and therefore, one staff expenses related to salary component was genuine by the assessee as revenue expenditure. Hence, the Ground No. 2 is al ..... X X X X Extracts X X X X X X X X Extracts X X X X
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