AI Drafter 
TaxTMI 
TaxTMI 
2016 (9) TMI 257
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....the learned CIT(A) arising from the assessment order dated 25th August, 2014 passed by the learned Assessing Officer (hereinafter called "the AO") u/s 143(3) of the Income Tax Act,1961 (Hereinafter called "the Act"). 2. The grounds of appeal raised by the Assessee Company in the memo of appeal filed with the Income Tax Appellate Tribunal, Mumbai (hereinafter called "the Tribunal") read as under:- "1) On the facts and circumstances of the case, the learned CIT(A) legally erred in confirming the disallowance made by Assessing officer for a sum of Rs.l,38,000/- paid as Salary to Director. 2) On the facts and circumstances of the case, the learned CIT (A) legally erred in confirming the charging of Interest u/s 234B of the Act at Rs. 1....
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....e company during the year under consideration and majority of the expenditure was incurred on account of Directors Remuneration. The A.O. held that in the absence of any business activity by the assessee company, such expenditure against the interest income was not allowable. As per the A.O. the interest income has to be taxed under the residuary head of 'income from other sources' u/s 56 of the Act, and therefore, the attributable expenditure allowable to earn such income is the expenditure as laid down u/s 57 of the Act. The assessee company has claimed Directors remuneration of Rs. 1,38,000/- which has no direct nexus with the interest income earned by the assessee company. Similarly , the other expenses except the expenditure on account....
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.... not necessary that every year the assessee company must have earned income from business or profession . The ld. CIT(A) after considering the submissions of the assessee company and the assessment order of the A.O. observed that the assessee company has earned interest income from FDR's with Kotak Mahindra Bank. The FDR's were made out of surplus funds available with the assessee company for earning interest income which is not connected with the business of the assessee company, hence, the A.O. was correct in assessing the interest income earned from surplus funds by investing in the FDRs as income from other sources. The quantum of salary to Directors are allowed in accordance to its efforts and contribution to the business carried ou....
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....f Rs. 2,58,861/- from FDRs maintained with Kotak Mahindra Bank which is a business income although the A.O. has treated the same as income from other sources, which is confirmed by the ld. CIT(A). It is submitted that the assessee company is private limited company and it is essential to maintain the company and to keep the Directors and hence Directors Remuneration paid to the Directors is allowable . There are no employees in the company and efforts were made to carry on the business of the company. It is submitted that in the past, interest income was assessed to tax as business income and only in this impugned assessment year the interest income has been charged under the head 'income from other sources'. 8. The ld. D.R. submitted th....
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....on'ble Gujarat High Court in the case of CIT v. Prayashvin B. Patel, 240 ITR 931 as well as the decision of Mumbai Tribunal in the case of Aatur Holding P. Ltd., 112 Taxman 75 (Mag.) and Delhi Tribunal in the case of ACIT v. JNG Builders P. Ltd. have held that there are certain expenses such as audit fees, salaries, professional fee , insurance , printing and stationary, bank charges, house keeping charges , repairs and maintenance etc which are necessary to maintain the corporate entity and are allowable expenses and it is not necessary that every year the assessee must have earned income from business or profession and the assessee may be required to spend the amount for carrying on its activities . The assessee company incurred expenses ....