2019 (6) TMI 342
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.... 'the Act') for assessment year 2010-11. 2. In this particular case the assessee has challenged the disallowance of Rs. 8,75,403/- as claimed by the assessee as business loss on the ground, that the appellant company has not undertaken any business activity. The fact of the case is this that in the Financial Year 2006-07 the appellant company as acquired the business building of an amount of Rs. 2,02,85,902/- and other vehicles of Rs. 13,75,694/- pursuant to a scheme of arrangement for demerger between Net Vision Web Technology Ltd. and the appellant by and under an order dated 14.06.2006 passed by Hon'ble High Court finally approved on 04.05.2007. The appellant stopped his machinery supplying business activity in the Financial Year 2006-0....
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....re incurred by the assessee as claimed to have been set off against income from house property as contended by the assessee was not permissible u/s. 24 of the Act as also opined by the Ld. AO. Thus, the deduction of business expenses to the tune of Rs. 8,75,403/- as claimed u/s. 24 of the Act by the assessee was disallowed which was confirmed in appeal. Hence the instant appeal before us. 3. At the time of hearing of the instant appeal the Ld. Counsel appearing for the assessee submitted before us that the authorities below failed to appreciate that the assessee has incurred expenses for maintaining the establishment. It is true that the assessee has changed its nature of business but there was no cessession of business of the assessee as ....
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.... needs to incur certain expenditure to keep itself afloat and have its continued existence. Unlikely a natural person, a company can only operate through other natural persons-whether employees or others. It is not the case of the Assessing Officer that the expenditure of the assessee company are excessive or unreasonable vis-a-visits legitimate business requirements. The Hon'ble High Courts have consistently held that in the case of the corporate assessees such expenses have to be allowed as deduction irrespective of whether or not the assessee is engaged in active business and even if assessee has only passive incomes. The CIT(A) was, therefore, justified in his conclusions. That is, however, not the only reason why the disallowance....
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....ed in the accounts in the year of accounts". It was then observed that the question whether the business is being carried on must depend in each case on its own facts and not on any general theory of law. Their Lordships then referred to, with approval, Lord Summer's observation in IRC v. South Behar Railway Co. Ltd. [1925] 12 Tax Cases 657 that business is not confined to being busy; in many businesses long intervals of inactivity occur. "The concern is still a going concern though a very quiet one." After elaborate survey of judicial precedents on the issue, their Lordships concluded, in the light of, as noted above, the factual position that "there is nothing on record to showthat he completely abandoned or closed the business foreve....
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....rightly deleted the same." 5. In the matter of Mukti Properties it was held that the assessee derived income from real estate business are also income from house property. The assessee's claim for deduction of brokerage and commission cannot be disallowed against the business income on the ground that the assessee is not entitled to any further deduction other than those provided u/s. 24 of the Act. In the case of CIT vs. New India Industries Ltd. it was further held that if an assessee derived income from a commercial asset which is capable of being used as a commercial asset, then it is income from his business whether he uses that commercial asset himself or let it out to somebody else to be used. The asset would not cease to be commer....