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2011 (7) TMI 579 - ITAT, DELHIDisallowance of expenses - business had not been commenced during the year under consideration - Held that:- The assessee's application to Stock Exchange for registration was allowed on provisional basis on and from December 6, 2004. Thereafter, the assessee also made applications before SEBI as well as National Securities Clearing Corporation Ltd., by paying necessary fees and complying with all the requirements. There may be interval between the setting up of the business and the actual commencement of the business but all the expenses incurred during the interval of setting up of the business and the commencement of the business are also permissible for deduction. Thus having regard to the nature of the assessee's business of acting as a trading member and clearing member of the wholesale debt market it can be said that assessee's business was set up as soon as the assessee got registration by the National Stock Exchange for trading membership of capital market and futures options segments inasmuch as the assessee's business was ready to commence on the day when the assessee got provisional registration from the National Stock Exchange. Therefore the expenses incurred on or after 6-12-2004 are permissible for deduction as business expenses and in order to allow these expenses as admissible deduction, it is not necessary that the assessee should have earned some income out of such activity or all the three stages should have been completed. It is enough that the first stage of the business had started in order to claim the business expenses as admissible deduction - direct the AO to quantify the amount of expenses and allow after examining and verifying the genuineness of the expenses and their admissibility under the provisions of Income-tax Act - partly in favour of assessee.
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