ITO, Corp Ward-1(4), Chennai V. Dev Electronics Pvt Ltd, Chennai

ITA 107/CHNY/2019

• Counselvise Citation: [2024] 130 COUNSELVISE.COM (IT) 0699 (ITAT-CHENNAI)
• Duration Of Justice: 5 year(s) 8 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-09-2024
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 10-09-2024
• Assessment Year: 2007-2008
• Appeal Filed On: 10-01-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R. ANITA LD
• Assessee Lawyers: T. NARAYANAN LD
• Keywords: Set aside; Business income; Business expenditure; Audit objection
• Section: 143(3); 20

Judgement Text

आयकर अपीलीय अिधकरण ‘सी’ ायपीठ चे ई म । IN THE INCOME TAX APPELLATE TRIBUNAL ‘C’ BENCH, CHENNAI माननीय +ी मनोज कु मार अ/वाल ,लेखा सद3 एवं माननीय +ी मनु कु मार िग7र, ाियक सद3 के सम8। BEFORE HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM AND HON’BLE SHRI MANU KUMAR GIRI, JM आयकरअपील सं./ ITA No.107/Chny/2019 (िनधा9रणवष9 / As sessment Year: 2007-08) Income Tax Officer Corporate Ward-1(4), Chennai. बनाम/ V s . M/s Dev Electronics Pvt. Ltd. Type-II/1, Dr. VSI Estate, Thiruvanmiyur, Chennai-600 041. थायीलेखासं./जीआइआरसं./PAN/GIR No. AAACD-2673-H (अपीलाथ /Appellant) : ( थ / Respondent) अपीलाथ कीओरसे/ Appellant by : Ms. R. Anita (Addl.CIT)-Ld. DR थ कीओरसे/Respondent by : Shri T. Narayanan (CA)-Ld. AR सुनवाई की तारीख/Date of Hearing : 11-09-2024 घोषणा की तारीख /Date of Pronouncement : 11-09-2024 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by revenue for Assessment Year (AY) 2007-08 arises out of the order of learned Commissioner of Income Tax, (Appeals)-3, Chennai [CIT(A)] dated 28-09-2018 in the matter of an assessment framed by Ld. Assessing Officer [AO] u/s. 143(3) r.w.s.147 of the Act on 27-06-2014. The registry has noted delay of 20 days in the appeal which stand condoned. The grounds raised by the revenue read as under: - 1. The order of the Ld. CIT(A) is contrary to law, facts and circumstances of the case. 2 2. The Ld.CIT(A) erred in giving relief to the assessee by holding that the business has closed when the assessee has been incurring business expenditure, indicating the business was in progress. Merely because there were no business receipts during the year does not indicate closure of business. 3. This case is eligible for appeal as this case is covered under exception 10(C) of Circular No.3/2018 as the addition pertains to an issue that arises out of a Revenue Audit objection which has been accepted by the Department. 4. For these and other grounds that may be adduced at the time of hearing, it is prayed that the order of the Ld. CIT(A) be set aside and that of the AO restored. The sole grievance of the revenue is allowance of business expenditure. Having heard rival submissions and upon perusal of case records, our adjudication would be as under. 2. The assessee being resident corporate assessee admitted income of Rs.18.66 Lacs from house property on leasing out of factory premises. Against the same, the assessee claimed business loss of Rs.3.37 Lacs. The Ld. AO denied the same on the ground that the assessee did not earn any business income other than Income from house property. The business of the assessee had closed down and it had leased out factory premises. The assessee debited expenditure of Rs.11.94 Lacs out of which the expenditure as incurred in connection with earning of house property income was suo-motu disallowed by the assessee. However, the balance expenditure of Rs.3.37 Lacs was claimed as business expenditure. In the absence of any business income, the same was finally not allowed by Ld. AO. 3. The Ld. CIT(A), in para 4.4 of the impugned order, noted that the business became obsolete due to technological advancement in electronic field. However, the establishment expenses of the assessee could not be ruled out. The expenditure claimed by the assessee was incurred in the course of existence of the company. Therefore, the same was to be allowed. Aggrieved, the revenue is in further appeal before us. 3 4. The Ld. AR has placed on record the details of expenditure of Rs.3.37 Lacs. Upon perusal of the same, we find that the substantial expenditure has been incurred on payment of salaries, staff welfare, rent, accounting and consultancy charges etc. All these expenses are necessarily to be incurred for continuance of corporate entity of the assessee and the same has to be incurred notwithstanding the fact the no business has been carried out by the assessee. The expenditure incurred towards earning of house property income has already been disallowed by the assessee. Therefore, the expenditure has rightly been allowed by Ld. CIT(A). We order so. 5. The appeal stands dismissed. Order pronounced on 11 th September, 2024. Sd/- (MANU KUMAR GIRI) ाियक सद3 / JUDICIAL MEMBER Sd/- (MANOJ KUMAR AGGARWAL) लेखा सद3 / ACCOUNTANT MEMBER चे3ई Chennai; िदनांक Dated : 11-09-2024 DS आदेशकीSितिलिपअ/ेिषत/Copy of the Order forwarded to : 1. अपीलाथ /Appellant 2. थ /Respondent 3. आयकरआयु