TaxTMI 
TaxTMI 
2021 (1) TMI 88
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.... order of Commissioner of Income tax (Appeals) is contrary to law, facts, and circumstances of the case. 2. The Commissioner of Income tax (Appeals) erred in confirming that the Appellant has not carried on manufacturing activity In this year without appreciating the fact that there was only a lull In the business operations. 2.1 The Commissioner of Income tax (Appeals) erred In confirming the disallowance of expenses claimed by the assessee under Salary, Repairs and maintenance, Miscellaneous expenses, Interest on vehicle loan and Depreciation to the extent of Rs. 9,79,8351-. 2.2 The Commissioner of Income tax (Appeals) should have found that the factory of the appellant company is situated in Ambattur Industrial....
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....salary, repairs & maintenance, interest on vehicle loan, depreciation and miscellaneous expenses. During the course of assessment proceedings, when the Assessing Officer has called upon the assessee to explain nexus between the expenditure debited into profit & loss account and business operations, assessee submitted that although, it has not carried out any business activity for the impugned assessment year due to strike by workers, but it has continued to incur certain expenditure to keep plant & machinery in active condition and also corporate identity of the assessee and hence it cannot be said that expenditure incurred is not having nexus with the business activity of the assessee. The Assessing Officer was not convinced with the expla....
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....for the reason that there is no income from main business operations necessary expenditure incurred for the purpose of business cannot be disallowed. 5. The learned CIT(A) after considering the relevant submissions of the assessee and also by taking note of various facts brought out by Assessing Officer held that insofar as depreciation is concerned onus is on the assessee to prove that motor car and air-conditioner has been actually used for the purpose of earning income. Since the assessee has not discharged its onus to prove that there is nexus between the depreciation and income earned for the year, the same cannot be allowed as deduction . Similarly, as regards miscellaneous expenses learned CIT(A) observed that assessee has failed ....
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....pany, even though there is no main business operations for the year. The AR further submitted that there is no doubt, for the impugned assessment year, assessee has not carried out any business activity because of strike from employees. However, assessee has actually engaged in the business of manufacturing for past several years . Although, assessee has leased out part of its factory premises to outsiders, but it has to maintain plant and machinery and for this purpose it has incurred repairs & maintenance expenses. Likewise, assessee has to incur certain expenditure to maintain corporate status of the assessee, even though there is no main business activity in the year under consideration. The Assessing Officer as well as learned CIT(A) w....
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....enditure including salary, depreciation on car and air-conditioner , repairs and maintenanceothers and miscellaneous expenses, we find that none of the expenditure is having direct nexus with income earned for the year under consideration being interest income , rental income and dividend income. Unless, assessee proves nexus between expenditure debited into profit and loss account and income earned for the year, the question of allowance of expenditure does not arise. Moreover, assessee fails to file any evidence to prove that it was in the business activity but due to temporary lull in the business, business operations was not carried on for impugned assessment year . The Assessing Officer as well as learned CIT(A) have brought out clear ....