ACIT Circle-8(1), New Delhi V. Emcipi Electronics Pvt Ltd, New Delhi

ITA 4253/DEL/2019

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 9201 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 1 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-07-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 08-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LALIT KISHORE
• Keywords: Business income; Business expenditure
• Section: 143(2)

Judgement Text

1 ITA No. 4253/Del/2019 ACIT Vs. EMCIPI ELECTRONICS IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: ‘B’ NEW DELHI BEFORE SHRI B. R. R. KUMAR, ACCOUNTANT MEMBER AND SH. YOGESH KUMAR U.S., JUDICIAL MEMBER I.T.A. No. 4253/DEL/2019 (A.Y 2010-11) ACIT, Circle : 8 (1), New Delhi. (APPELLANT) Vs. M/s. Emcipi Electronics Pvt. Ltd., 118, Shahpur Jat, New Delhi – 110 049. PAN No. AAACE5229L (RESPONDENT) ORDER PER YOGESH KUMAR U.S., JM This appeal has been filed by the Revenue against the order dated 11/02/2019 passed by CIT(A)-34, New Delhi for Assessment Year 2010-11. 2. The Revenue has raised the following ground of appeal:- “ Ld. Commissioner of Income Tax (Appeals) erred in law and on the facts of the case in deleting the addition of Rs.1,83,85,198/- made by the AO on account of disallowance of expenses, not incurred wholly and exclusively for the purpose of business. “ Assessee by : Shri Upvan Gupta, Adv.; Department by: Shri Lalit Kishore, Sr. D.R.; Date of Hearing 25.05.2022 Date of Pronouncement 08.07.2022 2 ITA No. 4253/Del/2019 ACIT Vs. EMCIPI ELECTRONICS 3. Brief facts of the case are that, the assessee filed its return of income on 26.09.2010 showing the total income of Rs.2,16,45,540/-. The case was selected for scrutiny and the notice u/s 143(2) of the I.T Act was issued and served on 23.09.2011. In response to notice u/s 143(2) of the I.T Act, the Authorized Representatives of the assessee company attended the assessment proceedings and furnished the detail called for. The assessment order came to be passed on 28/01/2013 by disallowing the expenses of Rs. 3,60,09,520/- claimed by the assessee under the business expenses and passed assessment order by assessing the total income of the assessee at Rs.5,75,55,060/- as against the returned income of Rs.2,16,45,540/-. 4. Aggrieved by the assessment order dated 28/01/2013, the assessee has challenged the same before the CIT(A). The Ld. CIT(A) vide order dated 06/02/2019, confirmed the addition to the extent of Rs. 82,75,866.20/- made by the A.O and allowed the expense claimed by the assessee as against the business income at Rs. 1,83,85,198/-, accordingly, partly allowed the Appeal on 11/02/2019. 5. The Department of Revenue aggrieved by the order dated 11/02/2019, filed the present Appeal on the grounds mentioned above. 6. The Ld. DR submitted that, the CIT(A) has committed an error in deleting an amount of Rs. 1,83,85,198/- on accounting of disallowance of expenses which was not occurred wholly and exclusively for the purpose of business. Further, the Ld. DR has relied on the order of the A.O. 7. Per contra, the Ld. Counsel for the assessee submitted that, the assessee has shown the business income in the subsequent years i.e. Assessment Year 2011-12 & 2012-13 which has been allowed as expenses against the business 3 ITA No. 4253/Del/2019 ACIT Vs. EMCIPI ELECTRONICS income shown under the head of consultancy and electricity and generator expenses. Further submitted that, so long as expenses are incurred for the purpose of business, the same should be allowable as deduction and it is not necessary that expenditure may result in income immediately, the quantum of income is therefore, irrelevant for the purpose of considering the allow ability of expenses. So long as expenses are incurred for the purpose of business, the expense is allowable as deduction. Thus, justified the order of CIT(A). 8. We have heard both the sides, considered the material on record. The Ld. CIT(A) while deleting the addition found that, the assessee has shown the business income in the subsequent year i.e. 2011-12 & 2012-13 and the A.O has allowed the expenses against the business income shown under the head of consultancy and electricity and generator expenses. Further found that, the Ld. Assessing Officer has not given any finding and without appreciating the accounts filed by the appellant disallowed the expenses against the business income shown by the assessee. 9. The issue of quantum of income and allowableness of the expenses it has to be seen that, whether the expenditure incurred wholly and exclusively for the purpose of business or not. So long as the expenses are incurred for the purpose of business, in our opinion the same should be allowable as deduction and it is not necessary that the expenditure may result in income or there must be substantial income. The said view has been supported by the decision of Hon'ble Supreme Court in the case of CIT Vs. Malyalam Plantation Ltd. 53 ITR 140 and CIT Vs. Rajinder Pd. Moodi 115 ITR 519. 10. In view of the above discussion, we do not find any error or infirmity in the order of CIT(A). Accordingly, the Grounds of Appeal of the Revenue are dismissed. 4 ITA No. 4253/Del/2019 ACIT Vs. EMCIPI ELECTRONICS 11. In the result, the Appeal of the Revenue is dismissed. Order pronounced in the open court on : 08 /07/2022. Sd/- Sd/- (B. R. R. KUMAR) (YOGESH KUMAR U.S.) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated : 08/07/2022 RN* Copy forwarded to : 1. Appellant 2. Respondent 3. CIT 4. CIT (Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI