In the income Tax Appellate Tribunal
Delhi Bench: ‘SMC’ New Delhi
Before Shri S. V. Mehrotra, Accountant Member

ITA No.-739/del/2014
AY: 2009-10

AB Multiplex Pvt. Ltd. Rectangle-1, D-4 Saket District Centre New Delhi AAFCA5541C (APPELLANT)

Vs

ACIT Central Circle-21 New Delhi (RESPONDENT)

Appellant by None
Respondent by Sh. Robin Rawal, JCIT

Date of Hearing 22.06.2015
Date of Pronouncement 24.06.2015

ORDER

PER S. V. MEHROTRA, AM

This is an appeal filed by the assessee against the order of CIT(A) XII, New Delhi dated 4th November 2013 in Appeal No. 384/2013-14 for Assessment Year 2009-10.

2. Notice was sent to the assessee through registered post at the address given in Form 36. However, on the date of hearing neither any adjournment application was filed by the assessee nor anyone appeared on behalf of the assessee. I, therefore, proceed to decide the appeal on merits qua assessee-appellant.

3. Brief facts of the case are that the assessee had filed return declaring a loss of Rs. Nil . The Assessing Officer has observed that this case belongs to ABW Group where survey u/s 133A was conducted on 29th December 2008. He noted from the profit and loss account that assessee had shown gross receipts of Rs.4,74,179/-, the details of which were as under, as per schedule L of the balance sheet.

Miscellaneous Income            Rs. 4,74,000/-
Short & access                       Rs.        178/-
                                                Rs. 4,74,178

4. From these details he concluded that there was no business income. He referred to following decisions to conclude that since no business was carried out by the assesses during the year, the question of computation of business income does not arise.
(i) SPB Bank Ltd. Vs. CIT (1980) 126 ITR 773 (Ker)/Perfect Pottery Co. Ltd. Vs. CIT (1987) 166 ITR 196 (MP)/ Rani J Sarala Devi Vs. CIT (1962) 46 ITR 83; (AP).
(ii) CIT Vs. Bangalore Transport Co. (1967) 66 ITR 373 (SC)

5. He, accordingly, did not accept the loss declared in profit and loss account on Rs.1,12,987/- treating the business income at Rs. Nil. However, considering the business expediency only the statutory expenses i.e audit fees of Rs.38,605/-and filing fee of Rs.928/- totaling to Rs.39,533/- were allowed. Accordingly he computed the assessee’s income as under:-

Gross receipts as declared                             Rs. 4,74,179/-
Less: Expenses as discussed above             Rs.     39,533/-
Net taxable income                                          Rs.  4,34,646/-
Rounded off                                                     Rs.   4,34,650/-

4. Before Ld. CIT(A), the assessee had made following submissions:-
(a) The assessee being a private Ltd company, was engaged in the business of builders and developers, filed its return of income on 27th November 2009, declaring a loss of Rs.2,14,470/- through e-filing. The accounts of the assessee company were audited by the auditors M/s Ashok Bhartia & Co. and audit report for financial year 2008-09 was submitted on 28th August 2009:
(b) The assessee company was regularly maintaining books of accounts in its regular course of business and having an established office, employees and infrastructure. Further its commercial project “Corporate suit” was under construction at IFFCO Chowk, Gurgaon during the year under consideration. A sum of Rs.293.76 lakhs was incurred on it under different head of construction during the year under consideration and was added to the inventories (project under construction) which were carried over to next year (s) and total value of inventories carried over as such was Rs. 1151.82 lakhs as on 31st March 2009.
(c) The expenses directly related to project were debited under construction by assessee company as per its accounting policies which have been consistently followed and office remuneration and ROC filing fee were claimed as expenses in the profit and loss account being administrative expenses and not directly related to the firm. It was further submitted that such expenses were required to be incurred even if no project was going on and no business was being carried on during the year but to maintain the life of the company and the accounting policies followed by the company are also mentioned by the auditors of the company in the audit report.
(d) The loss as per profit and loss account was rejected without rejecting the books of account.
(e) The assessee’s practice of revenue recognition based on the completed project has been accepted in toto.
(f) In response to Assessing Officer’s query vide Question No. 24 & 25 dated 18th August 2011 the assessee furnished the details of opening stock and the closing stock (work in progress) with evidence of valuation (Project wise). The assessee submitted that the details of project under construction had been furnished in Schedule H attached to the balance sheet. As regards reliance placed by Assessing Officer on various decisions noted earlier, the assessee pointed out that those case laws related to the cases where business of the assessee was closed before the year under reference.
(g) The assessee has been carrying on the business of builders and developers and the same was set up and commenced much before the year under consideration.
(h). The assessee had claimed only those administrative expenses which were not directly attributable to the project. Therefore, Assessing Officer should have allowed for the office rent also along with audit fee and ROC filing fee. The assesssee relied on various case laws.

5. Ld. CIT(A) summarily dismissed the assessee’s appeal inter alia, observing that assessee had no business activity during the year . I have considered the submissions of Ld. DR. The submissions made by assessee before the Ld. CIT(A) inter alia, regarding “Corporate suit” at IFFCO Chowk under construction was valued at the year end at Rs.1151.02 has not been controverted by the Department. All the expenses directly attributable to the project were charged to the construction work in progress account and only those administrative expenses which were necessary for maintenance of basic infrastructure of the company, were claimed by assessee in profit and loss account. Under such circumstances, I fail to understand as to how a finding has been arrived by authorities below that no business activity was carried out by assessee. The office rent claimed by assessee was a necessary business expenditure and, therefore, could not be denied to assessee. I, therefore, set aside the order of Ld. CIT (A) and direct the Assessing Officer to allow the office rent also along with audit fees and filing fee and compute the income accordingly.

6. In the result, the assessee’s appeal is allowed.

The order is pronounced in the open court on 23rd of June 2015.

Sd/-
(S. V. MEHROTRA)
ACCOUNTANT MEMBER
Dated:- 23 /06/2013