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2018 (10) TMI 1263 - ITAT MUMBAIDisallowance of expenditure - commencement of business or not - launching of fund - Held that:- In the instant case, assessee is engaged in the business of asset management positively and in case of service industry the criteria for determining when the business can be said to have been set up will differ and would be based on the facts of each case. In the instant case, assessee company has been incorporated to manage the assets of the mutual funds and it is incorporated with the said object. Upon its incorporation, it took various steps to commence its business such as hiring of people application to SEBI, organizing for space etc, and this amounted to setting up business and the entire expenses ought to be allowed. In any case, to acting as an AMC for the fund, it is necessary for it enter into an Investment Management Agreement with the Trustee Company, which was entered into on December 15, 2006. The assessee there on started the process of launch of the fund. The assessee successfully launch the first fund in May, 2007. As stated earlier, it has already started its activities for launching of fund. We hold that the AO was not justified in not accepting the claim of the assessee that its business activities are commenced from the date of its incorporation. Accordingly, we direct the AO to verify the expenses alleged to incur wholly and exclusively for the purpose of the business to allow the same as per law - decided in favour of assessee for statistical purposes
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