TaxTMI 
TaxTMI 
2013 (1) TMI 784
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....and invalid. 3. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in law and in facts in disallowing the business loss of ₹ 6,75,273 claimed by the appellant. 4. The learned CIT(A) erred in law and in facts in disallowing the following expenses:- Particulars Amount Travelling Expenses 1,00,609 Repairs & Maintenance 38,916 Rates & Taxes 27,291 Maintenance Charges 31,500 2. The only issue involved is, disallowance of business loss of ₹ 6,25,273, and consequential disallowance of certain expenditure on the ground that the assessee has not carried out any business activities in the impugned assessment year. 3. Brief facts, as noted by the Assessing Officer are that the assessee is engaged in the business of investment activity and letting out of property. During the year, the assessee had shown income under the heads "Income From House Property", "Long Term Capital Gains" and "Income From Other Sources". The taxable income had been shown at ₹ 5,27,477, under the head "Income From House Property". Income under the head "Profit or Gain in Business or Profession", the assessee had shown business income of ₹....
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....ould not be received in this year. Reference was also made to the object clauses given in the MOU, wherein property development was also one of the main activities. It was submitted that the assessee has advanced ₹ 6,28,63,212, for the purchase of property to develop the same which is within the realm of real estate development and it is a part of its authorised business activity. In support of the contentions that the expenditure claimed should be allowed, reliance was placed on the judgment of Calcutta High Court in CIT v/s Ganga Properties Ltd., [1993] 199 ITR 94 (Cal.). 5. The Commissioner (Appeals) did not agree with the contentions of the assessee on the ground that income earned by the assessee during the year is attributable to the heads other than business and profession and no expenses can be attributed to the business activity. The brokerage business of the assessee had stopped prior to March 2006, and subsequently, there was no such business. The income which the assessee had received out of advance of ₹ 6,28,00,000, the assessee has received interest which is taxable under the head "Income From Other Sources". However, in view of the judgment of Calcutta H....
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....n any kind of business activities in this year, therefore, claim of business loss has to be disallowed. Even the expenditure claimed by the assessee cannot be held to be allowable as the assessee has mainly derived income under the head "Long Term Capital Gain", "Income From Other Sources" and "Income From House Property". Whatever expenditure which can be said to be relevant for carrying out such activities, the learned Commissioner (Appeals) has already allowed such expenses to the assessee. Therefore, the findings and conclusions drawn by the learned Commissioner (Appeals) should be confirmed. 8. We have carefully considered the rival contentions, perused the orders of the authorities below and the material placed on record. On a perusal of the computation of come as well as the findings of the authorities below, we find that the assessee had not received any income from the business activity which can be said to fall within the head of "Profit and Gain of Business or Profession". In the computation made by the assessee under this head, it has first shown various income from all the activities like interest income, rental income, dividend income and profit on sale of investment....
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.... that the expenditure shall be deductible only if any income is made or earned. There is in fact nothing in the language of s. 57(iii) to suggest that the purpose for which the expenditure is made should fructify into any benefit by way of return in the shape of income. The plain natural construction of the language of s. 57(iii) irresistibly leads to the conclusion that to bring a case within the section, it is not necessary that any income should in fact have been earned as a result of the expenditure. It may be pointed out that an identical views was taken by this Court in Eastern Investments Ltd. vs. CIT (1951) 20 ITR 1 (SC) : TC41R.491, where interpreting the corresponding provision in s. 12(2) of the Indian IT Act, 1922, which was ipsissima verba in the same terms as s. 57(iii), Bose J., speaking on behalf of the Court, observed : "It is not necessary to show that the expenditure was a profitable one or that in fact any profit was earned." It is indeed difficult to see how, after this observation of the Court there can be any scope for controversy in regard to the interpretation of s. 57(iii). It is also interesting to note that, according to the Revenue, the ....
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.... and constricted meaning not warranted by the language of the section and, in fact, contrary to such language. This view which we are taking is clearly supported by the observations of Lord Thankerton in Huges vs. Bank of New Zealand (1938) 6 ITR 636 (HL) : TC16R.381, where the learned Law Lord said : "Expenditure in course of the trade which is unremunerative is none the less a proper deduction, if wholly and exclusively made for the purposes of the trade. It does not require the presence of a receipt on the credit side to justify the deduction of an expense." 10. Further, the Calcutta High Court in Ganga Properties Ltd. (supra), relying upon the judgment of Allahabad High Court in CIT v/s Rampur Timber, [1981] 129 ITR 58 (All.), observed and held as under:- "In our view, a limited company, even if it does not carry on business but it derives income from "other sources" has to maintain its establishment for complying with statutory obligations so long it is in operation and its name is not struck off the register or unless the company is dissolved which means cessation of all corporate activities of the company for all practical purposes. So long as it i....