TaxTMI 
TaxTMI 
2015 (6) TMI 564
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....nd to be cancelled as the order passed under section 263 of the Act is a subject matter of appeal before the Income-tax Appellate Tribunal, Mumbai. 2. The learned Commissioner of Income-tax(Appeals) erred in upholding the action of the Assessing Officer in treating the interest income on loans as "Income from other sources" as against income under the head "Profits & gains of business or profession", as considered by the appellant. 3. The learned Commissioner of Income-tax (Appeals) erred in upholding the action of the Assessing Officer in disallowing a sum of Rs. 7,25,385/- being aggregate of various expenses out of total expenses incurred for earning the business income. 4.(a) The learned Commissioner of Income-tax (Appeals) erred in upholding the action of the Assessing Officer in making an addition of Rs. 2,04,000/- being notional interest on advances paid to M/s B.U. Bhandari treating the same as a loan. (b) The appellant submits that similar additions made by the Assessing Officer in earlier years has been deleted by the Commissioner of Incometax (Appeals) & the learned Commissioner of Income-tax (Appeals) was not justified in taking a different view without any....
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.... that by the ld. CIT per the revision order. Though, therefore, he (AO) was not obliged to do so, where and to the extent inconsistent with the findings by the revisionary authority, could only be entertained in appeal before the first appellate authority. And which, as afore-stated, is not the case. We, accordingly, decline interference, dismissing the assessee's ground no.2. We may, however, this being a subsisting issue, with the assessment for AY 2004-05, the other year in appeal, having being reopened u/s. 147 on this ground, dwell on this issue in some detail. The assessee, incorporated in the year 1994, with the main object of development of the property, sites the reason for a lull in the real estate market for having never commenced the said business, i.e., since its inception. It further states to have, for this reason, decided to embark on the housing finance business, passing a resolution by its Board of Directors to that effect, besides seeking a clarification from the Reserve Bank of India (RBI), and which is stated to have clarified that no separate permission from it was required for the purpose, i.e., to commence the housing finance business. It is on this basis th....
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....nditure claimed by the assessee through its Profit & Loss Account as 'business expenses'. The AO, in view of his finding of the assessee not carrying on any business during the year and, in fact, for the preceding year as well, restricted the same only to the expenditure in respect of filing fees; bank charges; and audit fees, being the statutory, minimum charges payable by the assessee in view of its status as a company. The ld. CIT(A), before whom like submissions were raised by the assessee, reiterating its' case of the expenditure being in pursuance of its business activity, so that it is to be allowed all expenses incurred in its regular course as business expenditure, decided the matter thus: "I have gone through the submission, facts of the case and also the asstt.order. I have noted that the appellant simply claimed interest income as its business receipt and claimed various expenses. As the interest income is treated as income from other sources. A.O. is bound to consider whether any such expenses claimed have a direct nexus in earning interest income and therefore allowable u/s. 57(iii). I have noted that the A.O. has given his finding in the asstt.order as to which of s....
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....acts in relation thereto are that the assessee was observed to have paid a sum of Rs. 17 lakhs toward booking of two shops, to Maneklal Bhandari, as proprietor of B.U. Bhandari & Co., in pursuance to an agreement dated 18.04.1995, against the total cost of the said two properties at Rs. 18.10 lakhs, being Rs. 9 lacs and Rs. 9.10 lacs respectively. While the conveyance was agreed to be executed within a period of three years, neither the possession of the property had been taken by the assessee-company after nearly a decade, nor the amount recovered. The assessee clarified it to be an advance for office premises. The prolonged delay was stated to be on account of want of necessary permissions. The same was not found tenable by the AO in the absence of substantiation by the assessee of its' claims. The correspondence adduced in support was only between the assessee and Shri M.B. Bhandari, a director, so that it would be of little consequence; the permissions being required from third parties. No steps to take possession of the flats had been taken by the assessee. Under the circumstances, the impugned advance was inferred to be a loan to the payee and, accordingly, interest computed ....