Rani Shaver Poultry Breeding Farms Pvt. ... vs Assessee

This appeal by the assessee for the assessment year 2010-11 is directed against the order of learned CIT(A)-XVIII, New Delhi dated 29th August, 2013.

2. The grounds of appeal of the assessee are as under:-

"1. On the facts and circumstances of the case the Commissioner of Income Tax (Appeals) has erred in holding that the appellant did not carry out any business activity during the year.

2. The Commissioner of Income Tax (Appeals) has erred in sustaining disallowance of Rs.6,32,536/- made by the Assessing Officer which have been incurred by the appellant for the purposes of business of the company.

2 ITA-5829/Del/2013

3. That without prejudice to the above even otherwise the expenses incurred by the appellant are allowable under section 57(iii) of the Income Tax Act and the Commissioner (Appeals) is wrong in not allowing the same inspite of the specific claim made by the assessee company."

3. Learned counsel for the assessee submitted that the disallowance of `6,32,536/- was made by the Assessing Officer out of the expenses, although were incurred by the assessee for the purpose of business of the company. The expenses were allowable under Section 57(iii) of the Act. He submitted that even though the assessee could not continue with its poultry farm business, still the expenses claimed should be allowed as were necessary to earn the other income shown by the assessee.

4. Learned DR submitted that the assessee was not in the business of poultry farm during the relevant period and, therefore, the expenses have been rightly disallowed by the Assessing Officer and the CIT(A). He submitted that in the earlier assessment year 2008-09 also, the CIT(A) has allowed only a sum of `1 lakh on ad-hoc basis and the order of learned CIT(A) has been confirmed by the ITAT. In these facts, he submitted that the facts being similar, the assessee may not be allowed deduction of expenses claimed, which were not incurred for the poultry farm business of the assessee. He relied on the order of the Assessing Officer and the CIT(A).

5. We have considered the rival submissions and have perused the order of the Assessing Officer and the learned CIT(A). We find that the assessee has debited a sum of `23,34,708/- as expenses and depreciation in its profit and loss account and has itself disallowed a sum of `14,62,172/- out of the total expenses and the balance amount 3 ITA-5829/Del/2013

of `9,58,233/- was claimed by the assessee. The assessee has shown other income in the form of interest and dividend, interest on fixed deposits, rent receipt and other miscellaneous income. The assessee was having opening stock of live birds of 3465 in number and in the closing stock as on the last date of the accounting year i.e. 31.03.2010, live birds were nil. In these facts of the case, we are of the view that although the whole of the expenses could not be allowed to the assessee, but some part of the expenses claimed by the assessee has to be allowed as the assessee has liquidated its opening stock of live birds during the year and has shown other income totaling to `5,18,059/-. In this view of the matter, we hold that the ends of justice shall be met if the disallowance of `6,32,536/- confirmed by the CIT(A) is reduced to `3,00,000/- and the balance disallowance is deleted. Accordingly, the grounds of appeal of the assessee are partly allowed.

6. In the result, the appeal of the assessee is partly allowed.

Decision pronounced in the open Court on 6th May, 2015.

Sd/- Sd/- (INTURI RAMA RAO) RAO) (G.C. (G.C. GUPTA) GUPTA) ACCOUNTANT MEMBER VICE PRESIDENT

VK.

Copy forwarded to: -

1. Appellant : M/s Rani Shaver Poultry Breeding Farms Pvt.Ltd.,

3, Shopping Centre, West End, New Delhi - 110 021.

2. Respondent : Income Tax Officer, Ward-

Ward-15(1), C.R. Building, New Delhi.

3. CIT

4. CIT(A)

5. DR, ITAT

Assistant Registrar