The main claim in the present year is a sum of Rs. 14,50,123 which represents interest expenses on the loans used for construction of the building and which according to assessee deserves to be allowed under section 24(b) of the Income-tax Act, 1961 against the rental income.
According to the Assessing Officer, the assessee company has not carried out any business activities. It has shown only rental income and against the rental income, such type of business expenses cannot be allowed. Learned Assessing Officer further observed that vide letter dated 11th September, 2008, assessee has given an explanation but it failed to submit any evidence demonstrating the facts which can enable it to claim these expenses.
On appeal, Learned CIT (Appeals) has confirmed the disallowance. With the assistance of learned representatives, we have gone through the record carefully. In our opinion, the assessee failed to submit evidence in support of its claim. No material was brought on the record indicating the fact that the assessee has carried out business activities. In this year, it has only shown rental income and against such income, the expenses enumerated in section 24b can be allowed. These expenses do not fall within the ambit of section 24b, hence, in our opinion, learned Assessing Officer has rightly disallowed the claim of the assessee.
IN THE ITAT DELHI BENCH ‘F’
Rare Garments (P.) Ltd.
v.
Assistant Commissioner of Income-tax, Circle 15(1), New Delhi
IT APPEAL NO. 5760 (DELHI) OF 2011
[ASSESSMENT YEAR 2008-09]
JUNE 22, 2012
ORDER
Rajpal Yadav, Judicial Member
The assessee is in appeal before us against the order of Learned CIT (Appeals) dated 24.10.2011 passed for assessment year 2008-09. The solitary substantial grievance of the assessee is that Learned CIT (Appeals) has erred in confirming the disallowance of Rs. 1,42,564 and Rs. 14,50,123.
2. In response to the notice of hearing, no one has come present on behalf of the assessee. With the assistance of learned DR, we have gone through the record carefully. On 18.6.2012, we have heard ITA No. 5723/Del/2010, an appeal of the assessee filed in assessment year 2006-07 against the order of Learned CIT (Appeals) dated 17.8.2010. The grounds of appeal available in the present assessment year are verbatim same except variation in the quantum. The assessee has claimed the expenses of Rs. 1,42,564 under the head “business expenditure” which has been disallowed to it on the ground that it has not carried out any business activity. It has shown only rental income. In assessment year 2006-07, such expenses were claimed at Rs. 1,51,446. We have upheld the disallowance.
3. The main claim in the present year is a sum of Rs. 14,50,123 which represents interest expenses on the loans used for construction of the building and which according to assessee deserves to be allowed under section 24(b) of the Income-tax Act, 1961 against the rental income. We find that in assessment year 2006-07, a sum of Rs. 14,23,797 was claimed by the assessee as interest expenses on the loans used for construction of the building. This issue has been set aside by the ITAT to the Assessing Officer for re-adjudication. The order of the ITAT in assessment year 2006-07 on both the issues reads as under:
“Per Rajpal Yadav : Judicial Member – The assessee is in appeal before us against the order of Learned CIT (Appeals) dated 17.08.2010 passed for assessment year 2006-07. The grievance of the assessee is that Learned CIT (Appeals) has erred in confirming the disallowance of Rs. 1,51,446 and Rs. 14,23,797.
2. The registry has pointed out that the appeal is time barred by twenty days. In support of the condonation of delay, the assessee has filed an application along with affidavit of Shri Pawan Gupta S/o late Shri M.L. Gupta. It is pleaded in the application that the order of the Learned CIT (Appeals) was served upon the assessee on 27th September 2010. The appeal was presented before the ITAT on 16.12.2010. Shri Pawan Gupta, CA has deposed in his affidavit that he was regularly handling the income-tax matters of the assessee. In the year 2010, he was out of station when the order of the Learned CIT (Appeals) was communicated to his office by the assessee and he could not attend the work on account of his absence from the city. The appeal could not be filed well in time by the assessee.
3. On due consideration of the explanation of the assessee supported by the affidavit of CA Shri Pawan Gupta, we are of the view that there is no deliberate attempt at the end of the assessee for not filing the appeal before the ITAT well in time. It was prevented by sufficient reasons to present the appeal in the ITAT well in time. It has given its papers to the tax consultant who could not prepare the appeal and submit before the ITAT. Taking into consideration all these aspects, we allow the application for condonation of delay and condone the delay of twenty days in filing the appeal. We proceed to decide the appeal on merit.
4. In the first ground of appeal, grievance of the assessee is that Learned CIT (Appeals) has erred in confirming the disallowance of Rs. 1,51,446. The brief facts of the case are that the assessee has filed debited following expenses in its books of account:
