Alliance computer telephony India(P) LOimited, Bhadrak V. ACIT, Balasore Circle, Balassore

ITA 32/CTK/2021

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 6149 (ITAT-CUTTACK)
• Duration Of Justice: 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 04-04-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Depreciation; Set aside
• Section: 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BEFORE Alliance Computer Telephony India Pvt Ltd., Erain, Charampa, Bhadrak PAN/GIR No. (Appellant This is an appeal filed by the assessee against the or CIT(A), Cuttack dated 17.1.2020 2. The appeal is time barred by 335 days. The assessee condonation petition supported by affidavit sworn by Shri Rajkishore Agarwal, director of the assessee company, wherein, it is stated that due to lockdown under COVID situation from 25.3.202 filed within the due date. Hon’ble Supreme Court in Writ Petition (Civil) No.3 of 2020 order dated 23.3.2020, wherein, Hon’ble Supreme Court had extended time limit for filing of the appeal. He, therefore, prayed that the late filing of IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK ‘SMC’ BENCH, CUTTACK BEFORE SHRI CHANDRA MOHAN GARG, JUDICIAL ITA No.32/CTK/2021 Assessment Year : 2014-15 Alliance Computer Telephony India Pvt Ltd., Erain, Charampa, Vs. ACIT, Balasore Circle, Balasore No.AACCA 6626 P (Appellant) .. ( Respondent Assessee by : Shri Mohit Sheth Revenue by : Shri Charan Das, DR Date of Hearing : 07/12/ 20 Date of Pronouncement : 20/12 O R D E R This is an appeal filed by the assessee against the or CIT(A), Cuttack dated 17.1.2020 for the assessment year The appeal is time barred by 335 days. The assessee condonation petition supported by affidavit sworn by Shri Rajkishore Agarwal, director of the assessee company, wherein, it is stated that due to lockdown under COVID situation from 25.3.2020, the appeal could not be filed within the due date. He also referred to the suo moto decision of Hon’ble Supreme Court in Writ Petition (Civil) No.3 of 2020 order dated 23.3.2020, wherein, Hon’ble Supreme Court had extended time limit for filing of the appeal. He, therefore, prayed that the late filing of Page1 | 6 IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH, CUTTACK JUDICIAL MEMBER ACIT, Balasore Circle, Respondent) Mohit Sheth, AR Charan Das, DR / 2021 12/2021 This is an appeal filed by the assessee against the order of the for the assessment year 2014-15. The appeal is time barred by 335 days. The assessee has filed condonation petition supported by affidavit sworn by Shri Rajkishore Agarwal, director of the assessee company, wherein, it is stated that due to 0, the appeal could not be He also referred to the suo moto decision of Hon’ble Supreme Court in Writ Petition (Civil) No.3 of 2020 order dated 23.3.2020, wherein, Hon’ble Supreme Court had extended time limit for filing of the appeal. He, therefore, prayed that the late filing of the appeal ITA No.32/CTK/2021 Assessment Year : 2014-15 Page2 | 6 may be condoned. Ld D.R. did not oppose the condonation petition. In view of above, I condone the delay in filing the appeal and admit for adjudication. 3. The sole grievance of the assessee in this appeal is that the ld CIT(A) erred in confirming the addition of Rs.3,81,561/- made by disallowing loss chargeable under the head “Business and profession” and to be set of against the income from other sources”. 4. Facts of the case are that the assessee is a company derives income from software development. During the course of assessment proceedings, the Assessing Officer noticed on verification of P&L account that, the assessee had claimed expenses Rs.4,48,042/-, thereby claiming business loss of Rs.3,81,561/- & showing income from other sources of Rs.17,00,548/- under the following heads: i) Financial Cost ; Rs. 1,478/- ii) Depreciation : Rs.2,00,176/- iii) Other expenses : Rs.2,46,388/- 5. Since the assessee has not carried out any business activity, the Assessing Officer required the assessee to furnish evidences to substantiate the above expenses. In regard to depreciation, tt was explained that the company is formed to do the software development and other related work and has been doing so in the past. Due to stiff competition, the assessee company could not explore any business activity and, therefore, could not generate any new business. In regard to other expenses of Rs.2,46,388/-, ITA No.32/CTK/2021 Assessment Year : 2014-15 Page3 | 6 it was stated that the business loss suffered by the company under the income from profit and gain from business is adjusted against the interest income. However, in regard to financial cost of Rs.1,478/-, the assessee could not produce any evidence. In view of above, the Assessing Officer disallowed the expenses debited to profit and loss account and added the same to the total income of the assessee, which was upheld by the ld CIT(A) due to non-apperance from the side of the assessee. 6. Ld A.R. of the assessee submitted that Rs.1478/- was directly debited from the bank towards bank charges. As regards the depreciation expenses of Rs.2,00,176/-, ld A.R. submitted that the assessee maintain such list of assets which are normally used every day in offices whether there may be business or not. To support the expenses, he referred to electrification, furnitures & fixture, air conditioner, computer and its equipment, etc. He submitted that these assets are used in day to day work. As regards to other expenses of Rs.2,46,388/-, he submitted that the expenses relate to staff cost, accounting charges, audit fees, electric expenses, certain office expenses, ROC filing charges, small repairs and maintenance of office, telephone charges, travelling and misc expenses, tea and coffee, etc. Ld A.R. submitted that the AO without considering the fact and the explanation of the assessee, disallowed the explained debited to profit and loss account. Ld A.R. also referred to section 37 of the Income tax Act, which reads as under: ITA No.32/CTK/2021 Assessment Year : 2014-15 Page4 | 6 “Section 37 (1)Any expenditure (not being expenditure of the nature described in sections 30 to 36 and not being in the nature of capital expenditure or personal expenses of the assessee), laid out or expended wholly and exclusively for the purposes of the business or profession shall be allowed in computing the income chargeable under the head "Profits and gains of business or profession". 7. Ld A.R. submitted that these expenses are incurred fully for exclusively for the business of the assessee. Ld A.R. submitted that the assessee has not fully stopped the business activities but maintaining the office to revive the work in future. Ld A.R. also relied on the following decisions: i) DCIT vs HMS Real Estate Pvt Ltd.,(ITA No.3289/De/2018) ii) Dhanyanta Enterprises Pvt Ltd vs DCIT (ITA No.404/Del/2020) 8. Replying to above, ld DR supported the orders of the lower authorities. 9. I have heard the rival submissions and perused the record of the case. The Assessing Officer has disallowed the expenses debited to profit and loss account by the assessee. It is not disputed that the assessee was in business of software development from the past. Due to competition in the market or not able to get the orders from the market, the assessee was not earning any revenue during the year under consideration. But at the same time, it is maintaining its office and incur some expenditure to revive its function in the future. I find that the issue is fully covered in favour of the assessee by the above decisions. In the case of HMC Real Estate Pvt Ltd. (supra), it was held that it is well settled principle that all the expenses ITA No.32/CTK/2021 Assessment Year : 2014-15 Page5 | 6 incurred after the business had been set off are allowable as business deduction under section 37 of the Act. Further it is not necessary that any income has to be earned to claim deduction of expenses u/s.37 of the Act. In the case of Dhanyanta Enterprises Pvt Ltd (supra), it was held that merely because assessee has not earned any business income during the year, but has every intention to revive the same, therefore, the various expenses debited to the P&L account cannot be disallowed especially when the assessee is maintaining its office and kept its infrastructure ready for future business. In this view of the matter, I set aside the order of the ld CIT(A) and direct the AO to allow the expenses claimed by the assessee. 10. I find that in the instant case, the assessee is maintaining its office to revive the business endeavour. Hence, the decisions relied upon by ld A.R. of the assessee support the case of the assessee. Respectfully following the same, I set aside the orders of lower authorities and direct the AO to allow the expenses debited by the assessee in the profit and loss account. 11. In the result, appeal of the assessee is allowed. Order pronounced on 20/12/2021. Sd/- (Chandra Mohan Garg) JUDICIAL MEMBER Cuttack; Dated 20 /12/2021 ITA No.32/CTK/2021 Assessment Year : 2014-15 Page6 | 6 B.K.Parida, SPS (OS) Copy of the Order forwarded to : By order Sr.Pvt.secretary ITAT, Cuttack 1. The Appellant : Alliance Computer Telephony India Pvt Ltd., Erain, Charampa, Bhadrak 2. The Respondent. ACIT, Balasore Circle, Balasore 3. The CIT(A)-,Cuttack 4. Pr.CIT-, Cuttack 5. DR, ITAT, Cuttack 6. Guard file. //True Copy//