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TaxTMI 
TaxTMI 
TaxTMI 
2016 (12) TMI 1137
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.... the record. Facts in brief are that the assessee is a company engaged in the business of trading in shares and securities and finance. It furnished return of income for Assessment year 2009-10 on 28.09.2009 disclosing total loss at Rs. 7,55,82,608/-. During the assessment proceedings it was noted by the AO from the P&L account that the assessee has debited administrative and other expenses of Rs. 4,79,54,413/- in the P & L account. The assessee was required to furnish documentary evidence in support of its claim of such huge expenditure. The AO also deputed ward inspector to the office of the assessee company to ascertain the extent of expenses which might be required for earning the income of the assessee. The ITI has reported to the AO that the premises of the assessee has area of 20,000 sq.ft. approximately, consisting of 13 cabins and a big office hall where 60-70 employees were working for the assessee company and other seven group companies. It is also reported by the ITI that it was difficult to identify that which employees are working for which companies. It is further mentioned by the AO in the assessment order that the assessee companies' representative Shri Mayur Gala ....
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....ative expenses works out to be 27.27 crores, 1/6th of such expenditure incurred by the assessee and its group company works out to be 4.54 crores. From the record we found that the AO had wrongly disallowed 7/8th of the administrative expenses considering that the said expenses are incurred for the other 7 group companies mentioned in the order. The 7 group companies have their own business set up and functions independently, are separately assessed under the Income Tax Act and do not have any common business interest with the assessee. We found that expenses incurred for and on behalf of such companies aggregating to Rs. 45,91,976/- have been recovered from the said group companies. A statement showing the said recovery with a brief rational was submitted before the lower authorities. This shows that no part of the group companies expenses are included in the Profit & Loss account of the company which the learned DCIT has wrongly noted. 8. We had also verified the break-up of the expenses included in the Administrative Expenses are fixed overheads in nature and irrespective of the volume / turnover of the company; it has to be incurred and cannot be reduced immediately. The Admini....
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....postponed to the extent of uncertainty involved. In such cases it may be appropriate to recognise revenue only when it is reasonably certain that the ultimate collection will be made 13. Reliance was placed by learned AR on the decision of Hon'ble Delhi High Court in the case of Vasisth Chay Vyapar Ltd. (330 ITR 440), wherein the Court held as under: "The assessee, a non-banking financial company bound by the directions of the Reserve Bank of India, advanced certain intercorporate deposits upon which it did not receive interest for more than six months. Since the Non- Banking Financial Companies Prudential Norms (Reserve Bank) Directions, 1998 mandated a non-banking financial company to declare such advances as non-performing assets when the accrued interest therein is not paid by the debtor continuously for six months, treating the said intercorporate deposit as a non-performing asset, the assessee did not show the interest as its income, which according to the assessee was not realisable. The Assessing Officer, however, added the interest as income of the assessee holding that if had "accrued" to the assessee even if it was not actually realized as the assessee was f....
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....rat High Court in the case of Virendra R. Gandhi (in Tax Appeal No. 124 of 2005), wherein the Court observed as under :- We have heard learned advocates for the parties and perused the material on record. In our view, the decision of the Karnataka High Court in the case of Sridev Enterprises(supra) is directly on the issue posed in this appeal. It is necessary to reproduce relevant paragraph of the above decision, which reads as under:- "We are in agreement with the view expressed by the Appellate Tribunal. The status of the amount outstanding from Nalanda on the first day of the accounting year is the amount that stood outstanding on the last day of the previous accounting year and, therefore, its nature and status cannot be different on the first day of the current accounting year from its nature and status as on the last day of the previous accounting year. Regarding the past years, the assessee's claims for deduction were allowed in respect of the sums advanced during those years; this could be only on the assumption that those advances were not out of borrowed funds of the assessee. This finding during the previous years is the very basis of the deductions permit....