TaxTMI 
TaxTMI 
2019 (1) TMI 49
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....rrect in deleting the addition on account of disallowance of expenses and depreciation without appreciating the fact that the assessee has not undertaken any business activities during the year or during the previous year thereby not put to use the assets for business. 2. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was correct in deleting the addition on account of disallowance of expenses and depreciation without appreciating the fact that the assessee has undertaken only sale of property which does not qualify for allowance of expenses or depreciation. 3. The appellant prays that the order of the Ld. CIT(A) on the above grounds be set aside to the file of the AO or confirm the order of the AO....
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....e, the notice was given and after the reply of the notice, the expenses and depreciation was disallowed and added to the income of the assessee. Feeling aggrieved, the assessee filed an appeal before the CIT(A) who allowed the claim of the assessee, therefore, the revenue has filed the present appeal before us. 5. We have heard the argument and advanced by the Ld. Representative of the parties and perused the record. The Ld. Representative of the revenue has argued that the assessee was not doing any business in the relevant year of assessment, therefore, the expenses and depreciation was rightly disallowed by AO but the CIT(A) has wrongly allowed the claim of the assessee, therefore, the finding of the CIT(A) is wrong against law and fact....
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....g no business against which such expenditure or depreciation would possibly be permissible. I find that both these additions represent issues which have been repeatedly adjudicated by superior judicial authorities. In the case of Tansy Investments Pyt Ltd. v, ACIT (3722/Mum/99 dated 24th November 2010) [copy placed on the appellate record], the Hon'ble Mumbai Tribunal has discussed in detail the issue of disallowance of expenditure during periods when there was no business activity. Citing extensively from the decision of ITO v, Mokul Finance (P) Ltd. (supra), the Hon'ble Tribunal had held that corporate entities being artificial persons have to operate through natural persons and have to incur certain expenditure simply to keep the....
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....llowing the afforested decisions of the superior judicial authorities, the appellant's claims of expenditure and depreciation totaling Rs. 1,24.83,470/- are allowed. Coming to the action of the AO in adding back depreciation of Rs. 0.04 crore to book profits under section 115JB of Income Tax Act, 1961, it is clear that the said provision has clear stipulations for adding back items debited to the P & L a/c, depreciation being not one of them. There is hence no statutory basis for the AO's action of adding back Rs. 4,59,379/- to book profits in this fashion. This action of the AO is accordingly reversed. In view of the reliefs afforded earlier in this paragraph, both the grounds viz. nos. 1 ad 2 are allowed." 5. On appraisal of the....