2016 (1) TMI 542

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....e Respondent : Mr. Kamal Sawhney, Senior Standing counsel with Mr. Raghvendra K. Singh, Mr.Shikhar Garg And Mr. Sharad Agarwal, Advocates. ORDER 1. This appeal under Section 260A of the Income Tax Act, 1961 ('Act') is directed against an order dated 15th December 2003 passed by the Income Tax Appellate Tribunal ('ITAT') in ITA No. 2015/Del/2000 for the Assessment Year ('AY') 1996-97. 2. W....

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....ts - one relating to the agricultural activities in which a loss of Rs. 84,890 was shown and the other relating to financial activities showing a net profit of Rs. 13,34,872. 5. The return was picked up for scrutiny. In the assessment order dated 22nd March 1999, the Assessing Officer ('AO') disallowed business expenditure of Rs. 3.44 lakhs on the ground of 'commercial expediency'. The AO noted....

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....r in which it started the financial activity. In the earlier years when it was carrying out only agricultural activity, no salary was paid to the Directors. Consequently, the disallowance of Rs. 44,000 being the Director's salary was held not justified. The CIT (A) also deleted the addition made by the AO on disallowance of Rs. 3 lakhs being the staff salary, telephone expenses etc. The CIT (A) ob....

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....ancial activities." As regards the expenses on staff salary etc. all that is said is that since the premises was taken on rent from M/s. Triage Overseas which had already incurred extra expenditure on staff "we feel that the estimation drawn by the AO cannot be found to be faulted with." 9. The Court is of the view that the disallowance of the expenses to the extent of Rs. 3.44 lakhs by the AO ....