1 ITA No. 5652/Del/2015
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH: `E' NEW DELHI
BEFORE SHRI N. K. BILLAIYA, ACCOUNTANT MEMBER
AND
MS SUCHITRA KAMBLE, JUDICIAL MEMBER
I.T.A. No. 5652/DEL/2015 (A.Y 2011-12)
DCIT Vs Delhi Automobiles Ltd.
Circle-7(1), Room No. 403, 14-C, Sagar Apartments,
C. R. Building, I.P. Estate 6, Tilak Marg
New Delhi New Delhi
(APPELLANT) AABCD7933P
(RESPONDENT)
Appellant by Sh. S. M. Pandey, Sr. DR
Respondent by Sh. Aloke Periwal, CA
Date of Hearing 20.11.2018
Date of Pronouncement 22.11.2018
ORDER
PER SUCHITRA KAMBLE, JM
This appeal is filed by the Revenue against the order dated 22/7/2015
passed by CIT(A)-3, New Delhi for Assessment Year 2011-12.
2. The grounds of appeal are as under:-
"1. Whether on the facts and in the circumstances of the case and in law,
Ld.CIT(A) has erred in deleting addition on account of Management and other
expenses of Rs.70,18,334/- made by the A.O."
3. The return of income was e-filed on 30/3/2013 declaring loss of Rs.
53,40,530/-. The case was selected for scrutiny assessment. Notices u/s
143(2) was issued on 23/9/2013 and questionnaire u/s 142(1) was issued on
26/9/2013 which were duly served upon the assessee. In response, C.A of the
2 ITA No. 5652/Del/2015
assessee Company attended the proceeding from time to time. The details were
asked by the Assessing Officer and the assessee filed books of accounts which
was duly checked. The assessee submitted income under miscellaneous
income and expenditure in profit and loss account for the year ended 31st
March, 2011. The Assessing Officer observed that no significant business
activity was carried out by the assessee during the relevant period as well as in
the earlier years. The Assessing Officer held that the assessee has not done
any business activity during the year, therefore, the business expenses
claimed during the year at Rs.70,18,334/-cannot be allowed as business
expenditure, since no business activity was actually carried out by the
assessee, during the period relevant to Assessment Year 2011-12. Thus, the
Assessing Officer made addition of Rs.70,18,334/-. The Assessing Officer also
disallowed claim of depreciation amounting to Rs.1,99,972/-.
4. Being aggrieved by the assessment order, the assessee filed appeal before
the CIT (A). The CIT (A) partly allowed the appeal of the assessee.
5. During the hearing, the Ld. AR submitted that similar issue for
Assessment Year 2010-11 has been decided in favour of the assessee by the
Tribunal in assessee's own case. Therefore, the issue is covered in favour of
the assessee in this year as well.
6. The Ld. DR relied upon the orders of the Assessing Officer and CIT(A),
but could not distinguish the factual aspect mentioned in the Tribunal's order
for A.Y. 2010-11 and the present Assessment Year.
7. We have heard both the parties and perused the material available on
record. The issue discussed in the present appeal is similar to the earlier
Assessment Year which was decided by the Tribunal in ITA No. 1999/Del/2014
ACIT Vs. Delhi Auto Mobiles Ltd. order dated 9/6/2017 A.Y. 2010-11. The
Tribunal held as under:-
3 ITA No. 5652/Del/2015
"9. I have considered the submissions of both the parties and carefully gone
through the material available on the record. In the present case, the AO
disallowed all the expenses claimed by the assessee for the reasons that
there was no business activity during the year under consideration. On the
contrary, the claim of the assessee is that the business was not closed down
permanently, the assessee was facing lull at business and to keep itself a
float, the assessee company was required to incur various necessary and
bare minimum expenses. In the present case, the copy of profit and loss
account placed at page no. 13 of the assessee's paper book revealed that the
assessee had made sales of Rs.71,97,431.47 and also earned miscellaneous
income of Rs.4,05,13,194.14 in the preceding year. During the year under
consideration, the miscellaneous income earned by the assessee was of
Rs.2,90,013/- but there was no income from sales, the reasons given by the
assessee was that there was lull in business but the business itself was not
closed.
10. On a similar issue their lordships of the Hon'ble Jurisdictional High
Court at Delhi, in the case of CIT Vs Anita Jain (supra) observed in para 3 as
under:
"3. Ms. Bansal, learned counsel for the revenue, has drawn our attention
to the observation in CIT v. Lahore Electric Supply Co. Ltd. [1966] 60 ITR 1
(SC) to the effect that the "mere fact that the company had not gone into
liquidation would not establish that it had the intention to do business".
This submission loses sight of the observations made at page 5 which
clearly indicate that the Court came to the conclusion that the assessee
had closed business because it had not 'established an intention to resume
it'. Such is not the circumstance obtaining in the present case. This case
has been applied in CIT v. Vellore Electric Corpn. Ltd. [2000] 243 ITR 529
(Mad.) where it has been pithily noted that maintenance and
establishment is the indication of intention to resume business. In
Karsondas Ranchhoddass v. CIT [1972] 83 ITR 1 (Born.) it was noted that
there were two periods of activity before and after the interregnum or
period of inactivity which was indicative that the business was
nevertheless continued. We are in complete agreement with the view taken
4 ITA No. 5652/Del/2015
by the ITAT that the present case is an example of a lull in business and
not cessation in business."
11. In the aforesaid case the disallowance made by the AO was deleted
up to the level of the Tribunal and the Hon'ble Jurisdictional High Court held
that the view taken by the Tribunal was justified and there was no
substantial question of law involved. In the present case also the assessee
company continued to maintain an establishment which was the indication of
its intention to resume business and the expenses incurred by the assessee
were directly related to the business of the assessee. Therefore, the ld. CIT(A)
was fully justified in holding that the assessee had rightly claimed the
establishment expenses to resume its business in near future. I, therefore, do
not see any valid ground to interfere with the findings given by the ld. CIT(A)
and accordingly do not see any merit in this appeal of the department.
12. In the result, the appeal of the department is dismissed."
Thus, the issue contested herein by the Revenue is squarely covered by the
decision of the Tribunal in assessee's own case for A.Y. 2010-11. The factual
aspects are identical in the present assessment year as well. Therefore, appeal
of the Revenue is dismissed.
8. In result, appeal of the Revenue is dismissed.
Order pronounced in the Open Court on 22nd November, 2018.
Sd/- Sd/-
(N. K. BILLAIYA) (SUCHITRA KAMBLE)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated: 22/11/2018
R. Naheed *
Copy forwarded to:
1. Appellant
2. Respondent
5 ITA No. 5652/Del/2015
3. CIT
4. CIT(Appeals)
5. DR: ITAT
ASSISTANT REGISTRAR
ITAT NEW DELHI
Date of dictation 20 .11.2018
Date on which the typed draft is placed before the 20 .11.2018
dictating Member
Date on which the typed draft is placed before the
Other Member
Date on which the approved draft comes to the Sr.
PS/PS
Date on which the fair order is placed before the
Dictating Member for pronouncement
Date on which the fair order comes back to the Sr. 22 .11.2018
PS/PS
Date on which the final order is uploaded on the 22 .11.2018
website of ITAT
Date on which the file goes to the Bench Clerk 22 .11.2018
Date on which the file goes to the Head Clerk
6 ITA No. 5652/Del/2015
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