TaxTMI 
TaxTMI 
2023 (1) TMI 973
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....ounds of appeal taken by the assessee read as under :- "1. The Learned CIT(A) ('Ld. CIT(A)') and the Learned Assessing Officer ('Ld. AO') erred in law and in facts in disallowing an amount of Rs. 2,61,76,161 (Rupees Two Crores Sixty Seven Lacs Seventeen Thousand Five Hundred Seventeen only) as revenue expenditure under section 37 of the Income Tax Act, 1961 ('the Act'). 2. The Ld. CIT(A) failed to appreciate that these are revenue business expenditure such as employee costs and finance charges etc. incurred for the continuous running of the business and thus cannot be said to be of capital in nature so as to warrant their disallowance under Section 37 of the Act. 3. Without prejudice to Ground 0.1, the Ld. CI....
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....rent year be not disallowed as no business activities were taken during the year as well as previous year. AO was not satisfied with the assessee's explanation. He held that assessee company has not done any business and there was no nexus between earning of the income and expenditure. Further AO held that assessee needs to incur certain expenditure to retain its status as a company, hence expenditure relating to audit fees, insurance and other administrative & office expenses totaling Rs.4,68,907/- was allowed by the AO and rest of the expenditure of Rs.2,61,76,161/- was disallowed. 5. Against this order, assessee appeal before the ld. CIT (A). Ld. CIT(A) was of the opinion that the project abandoned by the assessee has provided intellect....
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.... sufficient. Basis the cost benefit analysis, it was seen that the costs exceeded the benefits and the project was found commercially unviable at that stage. The appellant though submitted that the project was shelved, but it is prudent that the project rendered a solid learning and created a strong basis for the appellant to re-launch the project in any time in future. The appellant has created a set of intellectual knowhow in this arena of e learning which is futuristic and is bound to be the norm in the times to come. Thus, the expenses so incurred have generated substantial IPRs for the appellant entity. These would not fall in the category of Revenue Item in view of the discussion supra. The AO is directed to allow the expenses as Capi....
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....enses had to be incurred by the assessee for statutory necessity and commercial expediency. Hence, ld. Counsel for the assessee claimed that this expenditure is revenue in nature and these are to be allowed. He further submitted that there is no finding of the AO that any particular expenditure was not related to assessee's business. Thereafter, ld. Counsel for the assessee referred to plethora of case laws in this regard as under:- l. CIT vs E-funds International India (2007) 162 Taxmann 1 Delhi High Court 2. ITO vs Mokul Finance (P) Ltd. (2009) 29 SOT 11 Delhi Tribunal 3. CIT vs Ganga Properties Ltd. (1992) 62 Taxmann 286 Calcutta High Court 4. L.Ve. Vairavan Chettiar vs CIT (1969) 72 ITR 114 Madras High Court 5. ITO vs Pate....
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....nts to be treated as revenue expenditure. It is settled law that any party cannot be allowed to approbate and reprobate i.e. accept and reject part of the same nature. In the same year, assessee wants to adopt two system of accounting In the present case, AO has allowed those expenditure which as per AO is necessary for the purpose of managing the status of the company. While the assessee on the other hand claimed that the entire expenditure was meant to preserve the status of the company and was statutory necessity and commercial expediency. In our considered opinion, those part of the expenditure incurred during the year which are identical to the earlier year, which have been written off by the assessee as abandoned cannot be allowed as ....