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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 ..... s of the Ld CIT(A). The appeal of the revenue is liable to be dismissed. - Sh. Pradip Kumar Kedia, Accountant Member And Sh. Sudhir Kumar, Judicial Member For the Appellant : Sh. Arvind Trivedi, Sr. DR. For the Respondent : Sh. Sanjiv Chaudhary, CA, Sh. V.K. Garg, CA And Sh. Parveen Kumar, CA ORDER PER SUDHIR KUMAR, JM: This appeal by the revenue is directed against the order of the Commissioner of Income Tax (Appeals)/NFAC, Delhi [hereinafter referred to as CIT(A) ] vide order dated 24.09.2018 pertaining to A.Y. 2014-15 pertaining to arises out of the assessment order dated13.12.2016 under section 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 busin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the material available on record. 8. The Ld. CIT(A) has relied the various judgments and deleted the addition made by AO by observing in the order as under:- 5.5 In the background of business history of the Appellant noted above, I am in agreement with the submissions of the AR that merely because there is less business income due to lull and dormancy in a particular year, disallowance based on the quantum of business income is not warranted particularly where the expenses claimed are more or less same as claimed and allowed in prior years. No specific disallowable expenses has been pointed by the AO and arbitrary, ad-hoc, disallowance has been made. It is not the proportion of income which determines the admissibility of expenses. The estimated disallowance as made by the AO is based on mere suspicion and conjectures and without mentioning how and which expense is not business expense or which expense relate to sources of income other than business income. As per AO some expenses must have been incurred in relation to income and activities other than business and business activities. It is not the case of the AO that the expenses incurred are not genuine. Rather in the impugned o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here being no tax loss because of the higher rate of tax applicable to the directors, there is no tax 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 and are not specific. No specific expense has been identified which is not a business expense except Rs. 84,922/- in relation to let out property at NOIDA. It relates to maintenance charges paid to Kings Reserve RWA. The AR based on the decision of Hon'ble Delhi High Court in the case of Commissioner of Income-tax v. R. J. Wood P. Ltd., stated that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Supreme Court in that case also clarified that the tax planning may be legitimate provided it is within the framework of the law. Hon'ble Supreme Court in the case of Union of India v. Azadi Bachao Andolan, while considering the taxability of capital gain on transfer of shares held in Indian Company by tax resident of Mauritius company and after considering the decision of Hon'ble Supreme Court in the case of Mc de company and after considering characterize the act of incorporation under the Mauritian law as a sham or a device actuated by improper motives. An act which is otherwise valid in law cannot be treated as non est merely on the basis of some underlying motive supposedly resulting in some economic detriment or prejudice to the national interests. Hon'ble Madras High Court in the case of M. V. Valioppan v. ITO [1988] 170 ITR 238 (Mad) has held that McDowell decision does not rule out Ignoring of genuine /real transactions being ignored merely on the ground 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 r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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