ITO, V. M/s Accusoft Technologies Pvt. Ltd.,

ITA 1220/BANG/2013

• Counselvise Citation: 122021114 RSA 2013
• Duration Of Justice: 1 year(s) 7 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 12-02-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 06-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P DHIVAHAR
• Keywords: Business income; Business expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE A BENCH, BANGALORE BEFORE SHRI N.V.VASUDEVAN, JUDICIAL MEMBER AND SHRI ABRAHAM P GEORGE, ACCOUNTANT MEMBER ITA NO.1220(BNG.)/2013 (ASSESSMENT YEA R : 2008-09) THE INCOME-TAX OFFICER WARD-11(1), BANGALORE APPELLANT VS M/S ACCUSOFT TECHNOLOGIES PVT.LTD. NO.1/5, SANTOSH COMPLEX, ARMUGAM CIRCLE, BASAVANAGUDI, BANGALORE-560 004 PAN NO.BLRA13553B RESPONDENT REVENUE BY : SHRI P.DHIVAHAR, JCIT ASSESSEE BY : SHRI S.ANANTHAN, CA DATE OF HEARING : 12-0 2-2015 DATE OF PRONOUNCEMENT : 11-03-2015 O R D E R PER ABRAHAM P GEORGE, AM: IN THIS APPEAL FILED BY THE REVENUE ITS GRIEVANCE IS THAT CIT(A) ALLOWED SET OFF OF BUSINESS LOSS AGAINST A RENTAL I NCOME AND INCOME FROM OTHER SOURCES. 2. ASSESSEE HAD FILED ITS RETURN FOR THE IMPUGNED A SSESSMENT YEARS DECLARING INCOME OF RS.21,16,920/-. DURING THE COUR SE OF ASSESSMENT PROCEEDINGS, IT WAS NOTED BY THE AO THAT ASSESSEE H AD CLAIMED BUSINESS 2 ITA NO.1220(B)/13 EXPENDITURE OF RS.31,70,933/-AGAINST WHICH THERE WA S NO BUSINESS RECEIPTS. HENCE, AS PER THE LEARNED AO THE CLAIM OF EXPENDITURE OF RS.31,70,933/- COULD NOT BE ALLOWED. HE COMPUTED TH E INCOME OF THE ASSESSEE CONSIDERING THE INCOME FROM HOUSE PROPERTY AND CAPITAL GAINS AS RETURNED BY THE ASSESSEE, WITHOUT ALLOWING SET OFF OF BUSINESS EXPENDITURE CLAIMED AS BUSINESS LOSS. 3. AGGRIEVED ASSESSEE MOVED IN APPEAL BEFORE THE CI T(A). ARGUMENT OF THE ASSESSEE WAS THAT ITS BUSINESS HAD NOT CLOSE D DOWN. AS PER THE ASSESSEE IT WAS DOING CONSULTANCY AND IT WAS NOT PO SSIBLE TO HAVE BUSINESS INCOME EVERY YEAR. JUST BECAUSE THERE WER E NO BUSINESS RECEIPTS GENUINE BUSINESS EXPENDITURE OUGHT NOT HAV E BEEN ALLOWED. AS PER ASSESSEE IT HAD NOT CLOSED DOWN ITS BUSINESS. RELIANCE WAS PLACED ON THE DECISION OF CO-ORDINATE BENCH IN THE CASE OF KN P SECURITIES PVT. LTD. VS ACIT (2010) 1 ITR (TRIB.) 130 (MUMBAI). LEARNED CIT(A)WAS APPRECIATIVE OF THE ABOVE CONTENTION OF THE ASSESSE E. AS PER THE CIT(A), ASSESSEE WAS ONLY CLAIMING OPERATIVE AND OTHER BUSI NESS EXPENDITURE WHICH HAD RESULTED IN THE LOSS. ACCORDING TO HIM T HE CLAIM OF LOSS COULD NOT BE DISALLOWED SOLELY FOR A REASON THAT THERE WA S NO BUSINESS INCOME DURING THE RELEVANT PREVIOUS YEAR. 3 ITA NO.1220(B)/13 4. NOW BEFORE US LEARNED DR STRONGLY ASSAILING THE ORDER OF THE LEARNED CIT(A) SUBMITTED THAT ASSESSEE HAD NO BUSIN ESS INCOME FOR A NUMBER OF YEARS AND THEREFORE, ITS CONTENTION THAT IT HAD CARRIED ON ANY BUSINESS WAS INCORRECT. AS PER THE LEARNED DR ASSE SSEE WAS ONLY TRYING TO DEPRESS ITS INCOME UNDER OTHER HEADS BY SHOWING AN EXAGGERATED BUSINESS LOSS. 5. PER CONTRA, LEARNED DR SUBMITTED THAT DIRECTORS REPORT, AUDITED ACCOUNTS, BALANCE SHEET AND ITS P&L ACCOUNT FOR THE YEAR ENDING 31-03- 2013, WOULD SHOW ASSESSEE HAD INCOME FROM ITS BUSIN ESS. RELIANCE WAS ALSO PLACED ON AN AGREEMENT DATED 12-11-2014 WITH O NE M/S MARKS AND SPENCER AND ANOTHER AGREEMENT DATED 10-09-2014 WITH M/S IMERIDIAN TECHNOLOGIES, IN THIS REGARD. 6. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL C ONTENTIONS. THE DIRECTORS REPORT OF THE ASSESSEE FOR FINANCIAL YEAR 2013-14 DOES SHOW THAT THE ASSESSEE WAS CARRYING ON BUSINESS AS CONSULTANT S. FOR THE YEAR ENDING 31-03-2014, ASSESSEE HAD INCOME OF RS.3,40,0 00/- FROM ITS OPERATIONS. THUS, IT HAS BEEN CLEARLY BROUGHT OUT BY THE ASSESSEE THAT IT HAD NO INTENTION OF CLOSING DOWN ITS BUSINESS. A TE MPORARY LULL IN THE BUSINESS WOULD NOT BE A REASON FOR DISALLOWING A CL AIM OF BUSINESS 4 ITA NO.1220(B)/13 EXPENDITURE. ASSESSEE HAS BEEN ABLE TO DEMONSTRATE THAT IT HAD NO INTENTION TO STOP THE BUSINESS. THE GENUINENESS OF THE EXPENDITURE WAS NOT DOUBTED BY THE AO. IN SUCH CIRCUMSTANCES, WE ARE OF THE OPINION, THAT CIT(A) WAS JUSTIFIED IN DIRECTING THE AO TO AL LOW THE CLAIM OF BUSINESS LOSS, THOUGH, THERE WAS NO CORRESPONDING B USINESS INCOME DURING THE RELEVANT PREVIOUS YEAR. WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE CIT(A). 7. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE SD/- SD/- (N.V.VASUDEVAN ) ( ABRAHAM P GEORGE ) JUD I CIAL ME MER ACCOUNTANT MEMBER BANGALORE: D A T E D : 11-03-2015 AM COPY TO : APPELLANT RESPONDENT CIT(A)-IV, BANGALORE. CIT DR, ITAT, BANGALORE. GUARD FILE (1+1) ASST. REGISTRAR ITAT, BANGALORE