Delhi High Court
Cit vs Dalmia Bros. (P.) Ltd. on 11 July, 2007
Bench: Madan B. Lokur, V.B. Gupta
ORDER
1. The revenue is aggrieved by an order dated 17-2-2006 passed by the Income Tax Appellate Tribunal, Delhi Bench 'G' in ITA No. 4862/Delhi/2002 relevant for the assessment year 1999-2000.
2. The assessed had raised certain loans and had claimed that they were utilized for business activities. The assessing officer asked the assessed by a letter dated 25-2-2002 to furnish evidence that the loans were utilized for the purposes of the business of the assessed. The assessed submitted the letter dated 27-2-2002 seeking further time and thereafter on 7-3-2002, filed a letter indicating the details of the loans utilized which were, inter alia, for office rent, vehicle repair, petrol expenses, etc. etc.
3. The assessing officer was of the view that the assessed had some professional receipts and there was no reason for the assessed to utilize loans for its business activities instead of utilizing the receipts for business activities. On this basis, the assessing officer declined to accept the contention of the assessed that the loan amount was used for business purposes.
4. In appeal, the Commissioner (Appeals) set aside the assessment order and accepted the view canvassed by the assessed. The Income Tax Appellate Tribunal upheld the order of the Commissioner (Appeals). While doing so, the Tribunal relied upon a decision of this Court in CIT v. Dalmia Cement (Bharat) Ltd. , wherein it was held that the reasonableness of the expenditure could be gone into only for the purposes of determining whether, in fact, the amount was spent. Once it is established that three was a nexus between the expenditure and the purpose of the business, the revenue cannot justifiably claim to put itself in the armchair of the businessman or in the position of the board of directors and decide how much is reasonable expenditure having regard to the circumstances of the case.
5. In view of the decision of this Court to the effect that the Assessing Officer cannot claim to run the affairs of the assessed in a manner that he thinks appropriate, which is what has happened in the present case, we find that no substantial question of law arises.
Dismissed.