TaxTMI 
TaxTMI 
2018 (11) TMI 793
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....n law and on facts in confirming the action of Ld. AO in making aggregate disallowance of Rs. 13,59,729/- (i.e. Employees benefit expenses of Rs. 11,48,400/-, Finance cost of Rs. 45,528/-, Depreciation of Rs.l,65,801/-) u/s 37 of the I.T. Act on account of and further erred in sustaining the disallowance of Rs. 7,86,508/- under the head administrative expenses u/s 37 and that too by recording Incorrect facts and findings and without observing the principles of natural justice. 2. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in making addition of Rs. 32,31,550/- by treating it as 'income from other sources' instead of 'income from business & prof....
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....stration and other expenses 8,08,490 Total 21,68,219 5. The Assessing Officer was of the opinion that the expenses claimed by the assessee has no relevance with the interest income earned. Therefore, the assessee was asked to justify its claim of expenditure. 6. In its reply, the assessee stated that all the expenses have been incurred wholly for the purpose of business only. The assessee stated that Standby Letter of Credit [SBLC] was taken for an amount of Euro ten millions and the primary objective of investment in FDRs was to obtain SBLC pertaining to assessee's business activity. It was further explained that the source of the FDs are primarily share application money of Rs. 3.75 crores received by the appellant company in....
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....et only relief of Rs. 21,910/- and the balance expenditure of Rs. 21,46,309/- was confirmed. 10. Before me, the ld. AR stated that for securing funds from PNB International, London, net worth of the assessee company was not adequate for doing business. Therefore, the assessee company redefined its share business and decided to float another group company i.e. Vishal Cruise Pvt. Ltd. (VCPL) and Passat Kreuzfahrten GmbH (Passat) in Germany to manage/operate its shipping business to acquire shipping assets. The ld. counsel for the assessee explained that it was decided and agreed by the group that the assessee company will look after all the shipping maintenance and manpower and M/s Vishal Crusies (P) Ltd. i.e. VCPL will acquire shipping asse....
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.... two group companies, namely, M/s Vishal Cruises (P) Ltd. i.e. VCPL and Passat Kreuzfahrten GmbH, Germany. It is also not disputed that the fixed deposits made by the assessee was used for the purposes of obtaining SBLC. This in itself proves that the SBLC was issued by the bank for the business purpose of the assessee company. In my understanding of the facts, promoting business of subsidiaries/group companies in itself is business activity. In my considered opinion, expenses have to be incurred for the purposes of business of the assessee and not for the purposes of earning profit. The lower authorities have disallowed the expenditure because the assessee has not earned any profit from its business activity. In my considered view, the dis....