Case Law Details
Alfa Bhoj Limited Vs ACIT (ITAT Delhi)
With respect to the claim of the deduction of deferred revenue expenditure of Rs. 2950195/– the assessee submitted that the above expenditure has been incurred by the assessee for exploring the future business opportunities. The learned AO disallowed the above sum u/s 37 of the income tax act as assessee failed to prove that the expenditure is wholly and exclusively laid out or expended for the purposes of the business of the assessee. In absence of any clarity about the purposes for which the expenditure has been incurred the above sum was disallowed by the learned assessing officer. The learned CIT – A has also confirmed above disallowance holding that the above expenditure has no nexus either with the existing business or any other business venture of the assessee. The assessee is merely exploring to start new business in South Africa. Thus these expenditure cannot be allowed as a deduction as incurred exclusively for the purposes of the business. The learned CIT – A also stated that no material has been produced to suggest that the assessee has explored some new activity in South Africa, which subsequently aborted for some reasons. Therefore on the basis of the above facts it is apparent that the expenditure incurred by the assessee could not be established by the assessee before the learned lower authorities that those expenditure have been incurred by the assessee wholly and exclusively for the purposes of the business. However, the lower authorities have not reached to a conclusion that assessee has furnished any inaccurate particulars of the income or has concealed any income on that score. In view of this we are of the view that mere disallowance of the expenditure claimed by the assessee cannot result into concealment of income. In view of this, we reverse the finding of the lower authorities and direct the learned assessing officer to delete the penalty levied on this sum.
FULL TEXT OF THE ITAT JUDGEMENT
1. This is an appeal filed by the assessee against the order of the ld CIT(A)-I, New Delhi dated 21.10.2011 for the Assessment Year 2002-03 wherein the learned CIT – capital is confirmed the penalty of INR 6285118/– levied by the learned assessing officer u/s 271 (1) (C) of the income tax act.
2. The assessee has raised the following grounds of appeal in ITA No. 265/Del/2012 for the Assessment Year 2002-03:-
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