2016 (12) TMI 806 - AT - Income Tax

Assessee's Appeal Granted for 2008-09 Assessment, Reassessment Ordered

Chatterjee Management Services Pvt. Ltd. Versus The Deputy Commissioner of Tax, Circle-8, Kolkata

Chatterjee Management Services Pvt. Ltd. Versus The Deputy Commissioner of Tax, Circle-8, Kolkata - TMI Issues Involved:1. Disallowance of business expenditure claimed by the assessee.2. Disallowance of bad debts claimed by the assessee.3. Disallowance of depreciation.4. Disallowance under section 80G of the Income Tax Act.5. Assessment of consultancy income under 'Income from Other Sources' instead of 'Business Income.'6. Refusal to allow carry forward of business losses.7. Refusal to allow set off of brought forward unabsorbed depreciation.8. Refusal to allow credit of tax deducted at source (TDS) and advance tax.Issue-wise Detailed Analysis:1. Disallowance of Business Expenditure:The Assessing Officer (AO) disallowed the entire business expenditure claimed by the assessee on the grounds that the assessee company was engaged in accommodation entries and did not carry out any real business activities. The Commissioner of Income-tax (Appeals) [CIT(A)] confirmed this disallowance. However, the Tribunal noted that the assessee had been in existence for several years, regularly filed returns, and provided evidence such as the Memorandum of Association, lease agreements, and comparative charts of revenue. The Tribunal found merit in the assessee's submissions and allowed the grounds of appeal, remitting the matter back to the AO for fresh examination based on the provided evidence.2. Disallowance of Bad Debts:The AO disallowed Rs. 6,66,667 claimed by the assessee as bad debts, and the CIT(A) upheld this disallowance. The Tribunal, considering the overall evidence and submissions, directed the AO to reassess the matter afresh, taking into account the details and evidence provided by the assessee.3. Disallowance of Depreciation:The AO disallowed Rs. 10,97,669 on account of depreciation, and this was confirmed by the CIT(A). The Tribunal, however, found that the AO's conclusion was based on the presumption of no business activity. It directed the AO to reassess the depreciation claim based on the evidence provided by the assessee.4. Disallowance under Section 80G:The AO disallowed Rs. 4,90,000 claimed under section 80G of the Income Tax Act, and the CIT(A) upheld this disallowance. The Tribunal directed the AO to re-examine this disallowance afresh, considering the evidence and details submitted by the assessee.5. Assessment of Consultancy Income:The AO assessed Rs. 16,85,400 received as consultancy income under 'Income from Other Sources' instead of 'Business Income.' The CIT(A) confirmed this assessment. The Tribunal, however, found that the assessee had been engaged in business activities and directed the AO to reassess the nature of the consultancy income based on the evidence provided.6. Refusal to Allow Carry Forward of Business Losses:The AO refused to allow the carry forward of business losses amounting to Rs. 1,85,90,613. The CIT(A) upheld this refusal. The Tribunal directed the AO to reassess the carry forward of business losses, considering the evidence and details provided by the assessee.7. Refusal to Allow Set Off of Brought Forward Unabsorbed Depreciation:The AO refused to allow the set off of brought forward unabsorbed depreciation. The CIT(A) confirmed this refusal. The Tribunal directed the AO to reassess the set off of unabsorbed depreciation based on the evidence provided by the assessee.8. Refusal to Allow Credit of TDS and Advance Tax:The AO refused to allow credit of TDS amounting to Rs. 1,69,950 and advance tax of Rs. 2,00,000. The CIT(A) upheld this refusal. The Tribunal directed the AO to reassess the credit of TDS and advance tax based on the evidence and details submitted by the assessee.Conclusion:The Tribunal found merit in the assessee's submissions and directed the AO to reassess the various disallowances and assessments afresh, based on the evidence and details provided by the assessee. The appeal filed by the assessee for the assessment year 2008-09 was allowed for statistical purposes.