Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: cpt :: TAX RATES - GOODS TAXABLE @ 4% :: Central Excise rule to resale the machines to a new company :: form 3cd :: ACCOUNTING STANDARD :: ACCOUNTING STANDARDS :: VAT RATES :: articles on VAT and GST in India :: due date for vat payment :: list of goods taxed at 4% :: TDS :: ARTICLES ON INPUT TAX CREDIT IN VAT :: VAT Audit :: empanelment :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes
 
 
From the Courts »
  Vatsala Shenoy vs. JCIT (Supreme Court)
  Vatsala Shenoy vs. JCIT (Supreme Court)
 M.K.Overseas Pvt. Ltd. Vs. Pr.Commissioner Of Income Tax-06
 Arshia Ahmed Qureshi Vs. Pr. Commissioner Of Income Tax-21
 CHAUDHARY SKIN TRADING COMPANY Vs. PR. COMMISSIONER OF INCOME TAX-21
  Sushila Devi vs. CIT (Delhi High Court)
  Vatsala Shenoy vs. JCIT (Supreme Court)
 Deputy Director Of Income Tax Vs. Virage Logic International
 Commissioner Of Income Tax-3 International Taxation Vs. Virage Logic International India
 Pr. Commissioner Of Income Tax-06 Vs. Moderate Leasing And Capital Services Pvt. Ltd.
 ITO vs. Vikram A. Pradhan (ITAT Mumbai)

M/s M.S. Associates,267, Masjid Moth, Uday Park,Front Portion, 2nd Floor,New Delhi Vs. Acit, Central Circle-4,New Delhi
September, 23rd 2015
                                              ITA NOS.2105-2016/Del/2014 &
                                                       2077-2078/DEL/2015


              IN THE INCOME TAX APPELLATE TRIBUNAL
                 DELHI BENCH "SMC-2", NEW DELHI
              BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER


                 I.T.A. Nos. 2105-2106/DEL/2014
                     A.YRS. 2008-09 & 2009-10
M/S M.S. ASSOCIATES,                    ACIT, CENTRAL CIRCLE-4,
267, MASJID MOTH, UDAY PARK,       VS. NEW DELHI
FRONT PORTION, 2ND FLOOR,
NEW DELHI
(PAN:AABFM1714A)


(APPELLANT)                              (RESPONDENT)

                               AND
                 I.T.A. Nos. 2077-2078/DEL/2015
                     A.YRS. 2010-11 & 2011-12
M/S M.S. ASSOCIATES,                    ACIT, CENTRAL CIRCLE-4,
267, MASJID MOTH, UDAY PARK,       VS. NEW DELHI
FRONT PORTION, 2ND FLOOR,
NEW DELHI
(PAN:AABFM1714A)
(APPELLANT)                              (RESPONDENT)

         Assessee by              :   SH. R.S. SINGHVI, CA
        Department by             :   Sh. SUDHIRANJAN, SENAPATI,
                                      SR. DR

                  Date of Hearing : 06-08-2015
                   Date of Order    :21-09-2015

                                ORDER
PER H.S. SIDHU : JM
     These appeals by the Assessee are directed against the
separate Orders of the Ld. Commissioner of Income Tax (Appeals)-
XII, New Delhi pertaining to assessment years 2008-09 to 2011-12.
Since the issues raised in these appeals are common and identical,
hence, these appeals are being consolidated and disposed of by this

                                 1
                                                  ITA NOS.2105-2016/Del/2014 &
                                                           2077-2078/DEL/2015


common order. For the sake of convenience, we are dealing with the
ITA NO. 2105/DEL/2014 (AY 2008-09).          The grounds raised in the
assessment year 2008-09 read as under:-

          1(i). That on the facts and circumstances of the case, the
                  Ld. CIT(A) was not justified in confirming the order
                  of the AO regarding closure of the business without
                  appreciating facts and written submission of the
                  appellant.

          (ii)    That finding about closure of the business is illegal,
                  arbitrary and without appreciating the facts and
                  legal principles.

          2(i)    That the claim of expenses were in respect of the
                  existing business and there being no dispute about
                  the genuineness of the claim, orders of the lower
                  authorities in rejecting the claim are without any
                  legal and factual basis.

          (ii)    That all the claim of expenses are relating to year
                  under reference and claim       being in accordance
                  with mercantile system of accounting, there is no
                  ground or basis for disallowance of same.

          (iii)   That the AO has even disallowed the            expenses
                  which are of statutory and incidental nature.

          3(i)    That on the facts and circumstances of the case, the
                  AO was not justified in considering interest income
                  which is incidental to the business activities as
                  income from other sources as against the claim of



                                      2
                                                  ITA NOS.2105-2016/Del/2014 &
                                                           2077-2078/DEL/2015


                   the assessee that same is part of business and
                   assessable under the head business.

           (ii)    That the interest being on in relation to bank
                   guarantees and margin money, the same is directly
                   related to incidental to business and as such there
                   is no ground or basis for considering the interest
                   under the head income from other sources.

           (iii)   That orders   of the lower authorities are in total
                   disregard to past history of the case.

           4.      That orders of the lower authorities are not justified
                   on facts and the same are bad in law.

2.   The facts narrated by the revenue authorities are not disputed

by both the parties, hence, the same are not repeated here for the

sake of convenience.





3.   During the hearing, Ld. Authorised Representative/CA of the

assessee, Shri R.S. Singhvi, has stated that Ld. CIT(A) was erred in

confirming the order of the AO regarding closure of the business

without appreciating the facts and written submission of the

assessee. He further stated that the finding about the closure of

the business is illegal, arbitrary and without appreciating the facts

and legal principles. In order to support his contention he stated

that the claim of expenses were in respect of the existing business

and there being no dispute about the genuineness of the claim, all

the claims of expenses are relating to year under reference and
                                     3
                                                 ITA NOS.2105-2016/Del/2014 &
                                                          2077-2078/DEL/2015


claim being in accordance     with mercantile system of accounting,

hence, there is no basis for disallowance of the same. Therefore, he

requested that the order of the Ld CIT(A) may be set aside.


4.   On the other hand, Ld. Sr. DR, Sh. Sudhiranjan Senapati, has

relied upon the order of the Ld. CIT(A).


5.   I have heard both the parties and perused the records,

especially the order of the Ld. CIT(A). For the sake of convenience, I

am reproducing the hereunder the findings of the Ld. CIT(A):-


           "1.1 I have considered the grounds raised in appeal and,

           the facts of the case. I have also considered the

           submission filed by the AR of the appellant.

           1.2 The Assessing Officer has disallowed the expenses

           and depreciation totalling to Rs. 68,79,508/- and added to

           the income of the assessee. The assessee has not shown

           any receipt from its business of purchase and sale of

           state lottery tickets being sole distributors of lotteries of

           Nagaland and Meghalaya state. The assessee has

           simultaneously claimed expenses of Rs.61,84,590/- and

           depreciation of Rs.6,94,918/0- against the in receipt from

           the said business of purchase and sale of state lottery

           tickets. The Assessing Officer has given a detailed


                                   4
                                         ITA NOS.2105-2016/Del/2014 &
                                                  2077-2078/DEL/2015


breakup     of    the   administrative     expenses       claimed

amounting to Rs.61,84,590/-.         Further, the Assessing

Officer has enquired about the status of the lottery

business from the point of view of allowability business

expediency of the claim of the said expenses. The

assessee has tried to justify the claim by stating that

dispute is going. on with the Director Meghalaya State

Lotteries due to their demand of increasing their profit

component. The fact is that the Director Meghalaya State

Lotteries   has    stopped    the   distributorship        of   the

assessee's on line lotteries during November 2006 and

from then on it has not been revived. The assessee has

stated to have incurred lots of expenditure in hope of

resuming the business. And there is no business receipt

during the financial year. The appellant pleaded hope for

revival of the business and justified the claim of

expenses.

1.3   The appellant has relied upon a number of case

laws in support of the contention.

1.4   I have carefully considered the submission filed by

the appellant, the facts of the case and the legal position

of the issue. The claim of assessee that it had to spend

                         5
                                        ITA NOS.2105-2016/Del/2014 &
                                                 2077-2078/DEL/2015


lots of expenses to-resume the lottery business is devoid

of merit for the reason that not only in the instant year

but subsequent also no such business has been resumed.

The assessee itself has submitted .a letter dated

20.11.2008, a reference of which has been made in the

order of assessment, from the lotteries, branch of

Finance Department of the Government of Nagaland

makes it abundantly dear that no such business has

resumed. Rather the fact remains that the assessee has

not transacted any business during the year and in

subsequent years. In view of this, the claim of expenses,

administrative as well as depreciation is liable to be

disallowed. Further, the interest received from bank is

liable to be considered as income from other sources

instead of the claim as business income. The Assessing

Officer has correctly placed reliance on the decision of

Hon'ble Delhi High Court reported in International

Marketing Ltd. Vs. Income Tax Officer [2007] 292 ITR 504

(Del).

1.5      Further, the claim of the legal and professional

charges      included,   in   the   administrative     expenses




                          6
                                                 ITA NOS.2105-2016/Del/2014 &
                                                          2077-2078/DEL/2015


          pertained to earlier years as found by the Assessing

          Officer and not to the instant year.

          1.6   In view of the above and in view of the fact that the

          assessee has not produced anything on record by virtue

          of which the assessee can substantiate that it is litigating

          with the State Government for retrieval of the license

          before any adjudicating authority, "the claim of the

          assessee for allowability of the expenses and considering

          of the bank interest as business income, is devoid of any

          merit. Further, till date no operations have commenced to

          justify that during the interim period the assessee was in

          the process of reviving the business. The case laws relied

          upon by the appellant are distinguishable on facts. In

          view of this, the contention of the appellant is rejected

          and the grounds raised in appeal are dismissed."




6.   After hearing both the parties and perusing the aforesaid

finding of the Ld. CIT(A), I find     considerable cogency in the

assessee's submissions made before the Ld. CIT(A) that the

assessee is a partnership firm and income under the head business

has been computed at NIL and there is no case of any tax liability.

The AO has made disallowance of claim of expenses on the ground

that no business activities has been carried out during the year

                                  7
                                                ITA NOS.2105-2016/Del/2014 &
                                                         2077-2078/DEL/2015


under reference.   I also find from the record that the assessee is

engaged in the business of lotteries and the business has never

been closed or discontinued, as stated by the Ld. Counsel of the

assessee.    The firm is still in existence and maintaining regular

establishment and infrastructure.     The lottery business is being

carried out on in terms of agreement with Nagaland and Meghalaya

Authorities. However, the business was discontinued by              these

authorities on the technical reasons and dispute which is still

pending in arbitration.    I find that the assessee has a regular

establishment and incurred various expenses as a part of running

business clearly establish that business has neither being closed or

discontinued by the assessee. In my view it is an established legal

position that merely on the ground that there is no business receipt

during the year, there cannot be any presumption about closure of

the business. In view of the above, I note that neither the AO nor

the Ld. CIT(A) has appreciated the facts and evidence filed by the

Assessee before them which in my opinion, needs to be considered

by the AO.     In the interest of justice, we remit back the issues in

dispute to the file of the AO with the directions to consider the

written submission filed by the assessee before the      Ld. CIT(A) and

decide the case afresh, under the law, after giving            adequate

opportunity of being heard to the assessee. Assessee is also


                                  8
                                                ITA NOS.2105-2016/Del/2014 &
                                                         2077-2078/DEL/2015


directed to cooperate with the AO and filed all the evidences /

documents to the AO to substantiate its case.


7.    In the result, all the four Appeals filed by the Assessee stand
allowed for statistical purposes.

      Order pronounced in the Open Court on 21/09/2015.



                                                         Sd/-
                                                   [H.S. SIDHU]
                                                JUDICIAL MEMBER

Date 21/09/2015
"SRBHATNAGAR"



Copy forwarded to: -
1.    Appellant -
2.    Respondent -
3.    CIT
4.    CIT (A)
5.    DR, ITAT
                            TRUE COPY                     By Order,




                                                  Assistant Registrar,
                                                  ITAT, Delhi Benches




                                    9

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2016 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Internet Marketing Website Marketing Internet Promotion Internet Marketing India Website Marketing India Internet Promotion India Internet Marketing Consultancy Website Marketing Consulta

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions