Tribunal allows appeal on depreciation & director remuneration, upholds lump sum expenses disallowance.

The Tribunal partially allowed the appeal, directing the AO to delete the disallowances of depreciation and director remuneration due to temporary business suspension not justifying deductions denial. However, the lump sum expenses disallowance was upheld as the assessee did not contest self-made vouchers. The Tribunal referenced case law to support its decision, emphasizing that temporary business lulls do not warrant deduction disallowances.

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Issues involved:
The issues involved in the judgment are the disallowance of depreciation, director remuneration, and lump sum expenses by the Assessing Officer, which were sustained in part by the Commissioner of Income Tax (Appeals). The main contention is whether the temporary suspension of business operations would disentitle the assessee from claiming certain deductions.

Depreciation Disallowance:
The Assessing Officer disallowed 50% of the depreciation claimed by the assessee as the business operations were stopped in July 2014, and assets were used for less than 180 days. The Commissioner of Income Tax (Appeals) concurred with this view. However, the Tribunal referred to relevant case laws and held that the temporary lull in business does not warrant the disallowance of depreciation. Citing the decision of the Hon'ble Madras High Court, the Tribunal set aside the disallowance of depreciation and directed the AO to delete it.

Director Remuneration Disallowance:
The AO restricted the director remuneration claimed by the assessee for the whole year, as business operations ceased in July 2014. The CIT(A) upheld this disallowance partially. The Tribunal, considering the temporary nature of the business suspension, referred to a Delhi Tribunal decision and held that the assessee, engaged in furthering business activities, is eligible for the claim of director remuneration. Consequently, the Tribunal set aside the CIT(A)'s decision on this issue and directed the AO to delete the disallowance.

Lump Sum Expenses Disallowance:
The AO made a lump sum disallowance from various expenses, which was partly sustained by the CIT(A). The Tribunal noted that the assessee did not contest the AO's finding that some vouchers were self-made. Therefore, the Tribunal upheld the CIT(A)'s decision on this issue.

Conclusion:
In conclusion, the Tribunal partly allowed the appeal of the assessee, directing the AO to delete the disallowances of depreciation and director remuneration. However, the disallowance of a lump sum amount from various expenses was upheld. The Tribunal emphasized that the temporary suspension of business activities does not justify disallowing certain deductions and referred to relevant case laws to support its decision.

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