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TMI Blog2024 (12) TMI 34X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 143(3)of the Income Tax Act 1961 [hereinafter referred as 'the Act']. 2. The revenue has raised following grounds of appeal :- 1. "Whether ton the facts and circumstances of the case the CIT(A) has erred in deleting the addition of Rs. 2,70,64,096/- made by the AO by making disallowance u/s 37 of the Income Tax Act, 1961, without appreciating the detailed reasons given by the AO in the Assessment Order." 2. "Whether on the facts and circumstances of the case the CIT(A) has erred in deleting the addition of Rs. 2,70,64,096/- without appreciating that the AO has rightly apportioned the business expenses out of total expenses looking to the fact that out of total income of Rs. 29,11,23,926/- the business income was only Rs. 1,89,73, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs 272000000/-this income was taxable @15%u/s 115BBD of the Act without any deduction because the assessee has reflected the income from other sources. He has strongly supported the order of the AO. 6. The Ld AR of the assessee has submitted that AO has not doubted the expenses. He has submitted that disallowance has made only suspicion and conjectures basis by the AO. He has also submitted that the addition made by AO was rightly deleted by the Ld CIT(A). Reliance has placed on the following Judgments; 1. CIT V. R.D Ramnath Company (HUF) [2010] 1 taxmann.com 166 (Delhi). 2. Commissioner of Income -tax Vs. Anita Jain, 3. CIT v. National Agricultural Co-op. Marketing Federation of India Ltd. - 11 taxmann.com 258 (Delhi- HC) 7. We ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elhi) on somewhat similar facts has held that estimated disallowance of 60% of salary & office expenses being based on surmises and conjectures cannot be sustained. Further in the case of CIT v. National Agricultural Co-op. Marketing Federation of India Ltd., [2011] 11 taxmann.com258(Del) disallowance of indirect expenses made on proportionate basis of total sales was not sustained. 5.6 Hon'ble Supreme Court in the case of S. A. Builders Ltd.v.CIT(Appeals), 288 ITR 001 (SC) and Sassoon J. David & Co. P. Ltd. vs. CIT,118 ITR 261 (SC)has held that all that section 37 requires is that the expenses should be incurred wholly and exclusively for the purpose o the business and the expression 'wholly and exclusively used in section 37 doe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arbitrage. This shows the bornafide of the appellant. 5,8 I am also in agreement with the AR that in the case of lull & dormancy where even there is no income and there is no indication of closure of business, expenses are allowable to retain the company and its assets with the hope of revival of business. In this case of the Appellant though there was decrease in business income in this year because of non-receipt of commission income, it is fact that there is much more business in subsequent years. Accordingly, I don't see any justification in disallowing almost entire business expenditure claimed by the Appellant. 5.9 The AO to support her case has made certain averments in the impugned order which are based on mere assumptions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, tax u/s 1150 is not payable as the foreign dividend is not exempt. Tax payable on foreign dividend under normal provisions under section 1158BD being less than tax payable under MAT, tax has been paid under MAT which is more than the tax rate u/s 115BBD The ratio of allowable business expenses at 7% has been estimated by the AO with reference to income other than business income which is mainly dividend income. That means entire expenses disallowed at Rs. 2,71,49,018/- have been allocated to foreign dividend income. In the impugned order, no such expense has been pointed out by the AO as being needed or incurred to receive dividend income. No effort is required from the investor to earn dividend income after investment has been made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd that it results in reducing the tax burden. Where there is a commercial or a business purpose in a transaction which only means that a transaction has the result of reducing the tax burden as a result of or a real deprivation of income as in the case of a family partition, that transaction would be permissible attempt for reducing the tax burden In this case of the Appellant, I don't find that the Appellant has entered into any sham or colourable transaction. In fact there is no tax avoidance. Mode of business, business transactions and the nature of expenses in this year are similar as accepted in prior years. Incurring loss under the head business income because of non-receipt of income from a particular source of income during t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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