2019 (7) TMI 1597 - AT - Income Tax

Tribunal upholds decision on business loss disallowance, finding expenses genuine and allowable with proper documentation.

ACIT, Central Circle-17, New Delhi. Versus M/s. Nussali Switzerland Ltd.

ACIT, Central Circle-17, New Delhi. Versus M/s. Nussali Switzerland Ltd. - TMI Issues:Challenge to deletion of disallowance of loss of Rs. 1,87,37,906.Analysis:The appeal by Revenue was against the deletion of disallowance of a loss claimed by the assessee. The assessment was completed under section 143(3) of the Income Tax Act, 1961, at NIL income despite the assessee filing a loss of Rs. 1,87,37,906. The Assessing Officer disallowed the claimed loss as no work was done by the assessee during the year and no computation for the loss claim was filed. The assessee, engaged in supplying material for the Commonwealth Games, faced complex litigation leading to stuck payments. The assessee argued that the expenses incurred were administrative in nature and allowable as per judicial decisions, citing the case of ITO vs. Mokul Finance Ltd., 110 TTJ 445 (Del.). The CIT(A) allowed the claim after considering the material on record and the detailed explanation provided by the assessee.The CIT(A) examined the observations made by the AO, the written and supplementary submissions of the appellant, and various evidence placed on record. The AO disallowed the claim without referring to details filed by the assessee or verifying them with the claim made in the Profit and Loss A/c. The CIT(A) found that the expenses claimed by the assessee were for business activities and deserved to be allowed. The ledger accounts and bills produced supported the business loss claimed by the assessee. The CIT(A) concluded that the AO ignored details and evidence submitted by the assessee, leading to the allowance of the business loss claimed.The Tribunal noted that the assessee submitted complete details and produced books of account before the authorities, which were verified. The expenses claimed were supported by bills and vouchers, incurred for business activities as the assessee company had not closed. The genuineness of the expenses could not be ignored, and there was no reason to disallow the loss claimed by the assessee. The AO did not discuss the details filed by the assessee, and no material was presented to challenge the findings of fact recorded by the CIT(A). Consequently, the Tribunal confirmed the CIT(A)'s decision to delete the addition, dismissing the departmental appeal.In conclusion, the Tribunal upheld the CIT(A)'s order, emphasizing the genuineness of the expenses claimed by the assessee for business activities and the failure of the AO to consider the details provided. The departmental appeal challenging the deletion of the disallowed loss was dismissed.