CHAT COMPUTERS LTD ( FORMELRY KNOWN AS CHAT COMPUTERS P.LTD, MUMBAI V. ASST CIT CEN CIR 40, MUMBAI

ITA 2238/MUM/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1882 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-01-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 10-01-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 18-03-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Business expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH C BENCH BEFORE SHRI B.R.MITTAL(JUDICIAL MEMBER) AND SHRI D.KARUNAKAR RAO (ACCOUNTANT MEMBER) ITA NO.2238/MUM/2011 ASSESSMENT YEAR: 2007-08 CHAT COMPUTERS LTD.,(FORMERLY KNOWN AS CHAT COMPUTERS P. LTD.), BHUPEN CHAMBERS , GROUND FLOOR, 9, DALAL STREET, FORT, MUMBAI. PA NO.AABCC 1122 B ACIT, CENT. CIRCLE-40, MUMBAI. (APPELLANT) VS. (RESPONDENT) APPELLANT BY : SHRI RAJIV KHANDELWAL RESPONDENT BY: SHRI RAJARSHI DWIVEDY. DATE OF HEARING: 10.1.2013 DATE OF PRONOUNCEMENT: 10 .1.2013 ORDER PER B.R.MITTAL, JM: THE ASSESEE HAS FILED THIS APPEAL FOR ASSESSMENT Y EAR 2007-08 AGAINST ORDER DATED 21.2.2011 OF LD CIT(A) -36, MUMBAI. 2. IN GROUND NO.1 OF APPEAL, ASSESSEE HAS DISPUTED THE ORDER OF LD CIT(A) IN CONFIRMING THE ACTION OF AO IN NOT ALLOWING BUSINES S LOSS OF 82,300/-. 3. THE RELEVANT FACTS ARE THAT ASSESSEE STATED THAT THERE WAS LOSS FROM SHARE AND SECURITIES OF RS.82,300/- ON ACCOUNT OF MARKET TO M ARKET VALUATION OF STOCK HELD BY IT. IT WAS STATED THAT THE SHARES WERE HELD BY THE ASSESSE E AS STOCK-IN-TRADE AND THE LOSS IS ARISING AS BUSINESS LOSS. AO STATED THAT ASSESSEE IS NOT DOING ANY TRADING ACTIVITY FOR THE PAST SEVERAL YEARS AND THE LOSSES ARE CLAIMED EVERY YEAR ON VALUATION OF SHARES. AO STATED THAT NO TRADING ACTIVITY WAS CARRIED OUT BY THE ASSESSEE DURING THE YEAR AND, ITA NO.2238/MUM/2011 ASSESSMENT YEAR: 2007-08 2 ACCORDINGLY, DISALLOWED LOSS OF RS.82,300/- CLAIMED BY THE ASSESSEE. BEING AGGRIEVED, ASSESSEE FILED APPEAL BEFORE THE FIRST APPELLATE AU THORITY. 4. ON BEHALF OF ASSESSEE, IT WAS CONTENDED THAT ASS ESSEE AS PER ORDERS OF SEBI COULD NOT CARRY OUT SHARE TRADING ACTIVITIES FROM A PRIL, 2001 AS IT HAD BEEN DEBARRED FROM UNDERTAKING FRESH BUSINESS AS STOCK-BROKERS OR MERCHANT BANKING AND ALSO ITS REGISTRATION HAS BEEN CANCELLED BY THE CONCERNED AU THORITIES. IT WAS STATED THAT THERE IS NEITHER ANY RECEIPT NOR ACCRUAL OF ANY BUSINESS REC EIPT AND THE SAME CLOSING STOCK IS BEING CARRIED FORWARD YEAR AFTER YEAR AND THE LOSS HAS NOT BEEN ALLOWED BY THE AO ON THE GROUND THAT IT DOES NOT RESULT INTO ANY ACTIVI TY. LD CIT(A) HAS DISMISSED THE APPEAL OF ASSESSEE BUT THERE IS NO FINDING GIVEN BY HIM IN THE IMPUGNED ORDER. 5. AT THE TIME OF HEARING OF THE APPEAL, LD REPRESE NTATIVES OF PARTIES CONCEDED THAT THERE IS NO SPEAKING ORDER OF LD CIT(A) ON THE ABOV E ISSUE. WE CONSIDER IT PRUDENT TO RESTORE THIS ISSUE TO THE FILE OF LD CIT(A) WITH A DIRECTION TO PASS A SPEAKING ORDER AFTER CONSIDERING SUBMISSIONS OF LD REPRESENTATIVES OF PA RTIES. HENCE, GROUND NO.1 IS ALLOWED FOR STATISTICAL PURPOSES. 6. IN GROUND NO.2 OF APPEAL, ASSESSEE HAS DISPUTED THE ORDER OF LD CIT(A) IN CONFIRMING THE ACTION OF AO TO DISALLOW THE EXPENSE S ON THE GROUND THAT IT IS NOT CARRYING OUT ANY BUSINESS ACTIVITY. 7. WE HAVE CONSIDERED SUBMISSIONS OF LD REPRESENTAT IVES OF PARTIES AND ORDERS OF AUTHORITIES BELOW. 8. WE OBSERVE THAT ASSESSEE CLAIMED EXPENSES OF RS. 27,512/-, DETAILS OF WHICH ARE ALSO MENTIONED AT PAGE 4 OF PB, WHICH IS A SCHEDULE OF THE PROFIT AND LOSS ACCOUNT. THE SAID EXPENDITURE HAS BEEN INCURRED UNDER THE FOLLO WING HEADS: 1) BANK CHARGES : RS. 8,864 2) FILING FEES : RS. 2,650 3) AUDITORS REMUNERATION: RS.11,236 4) GENERAL EXPENSES : RS.4,761 ITA NO.2238/MUM/2011 ASSESSMENT YEAR: 2007-08 3 9. AO DISALLOWED ABOVE EXPENSES ON THE GROUND THAT ASSESSEE WAS NOT CARRYING ON ANY ACTIVITIES. LD CIT(A) HAS CONFIRMED THE ACTION OF AO ON THE GROUND THAT THERE IS NO BUSINESS CARRIED ON BY THE ASSESSEE. 10. LD A.R. CONTENDED BEFORE LD CIT(A) AS WELL AS B EFORE US THAT THESE WERE OPERATIONAL BUSINESS EXPENSES WHICH WERE REQUIRED T O BE INCURRED IRRESPECTIVE OF THE FACT THAT THE BUSINESS IS CARRIED ON OR NOT. WE FIN D SUBSTANCE IN THE SUBMISSION OF LD A.R. THAT ASSESSEE HAS TO INCUR THE EXPENSES OF ABO VE NATURE TO KEEP THE CORPORATE ENTITY IN EXISTENCE AND TO COMPLY WITH THE REQUISIT E PROVISIONS OF THE COMPANIES ACT/OTHER LAWS AS APPLICABLE EVEN IF NO BUSINESS IS CARRIED ON. HENCE, THE EXPENSES AS INCURRED BY THE ASSESSEE (SUPRA) HAVE TO BE ALLOWED IRRESPECTIVE OF THE FACT WHETHER BUSINESS IS CARRIED ON BY THE ASSESSEE OR NOT. ACC ORDINGLY, WE DELETE THE DISALLOWANCE OF RS.27,512/- BY ALLOWING GROUND NO.2 OF APPEAL TA KEN BY ASSESSEE. 12. IN THE RESULT, APPEAL FILED BY ASSESSEE IS ALLO WED IN PART FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 10 TH JANUARY, 2013 SD/- (D.KARUNAKAR RAO) ACCOUNTANT MEMBER SD/- (B.R. MITTAL) JUDICIAL MEMBER MUMBAI, DATED 10 TH JANUARY, 2013 PARIDA COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS),36, MUMBAI 4. COMMISSIONER OF INCOME TAX, C-IV , MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, BENCH C MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI