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2019 (2) TMI 289 - AT - Income TaxAddition on account of disallowance of foreign exchange fluctuation loss - proof of commencement of business - Held that:- The fact remains that in assessment year 2009-10, the Revenue, in the order passed u/s 143(3), accepted the business loss declared by the assessee, in 2010-11, accepted the order of the CIT(A) on merits where he has given clear finding that the assessee has commenced business through its subsidiary in Mauritius for bidding up of power projects in foreign countries. After these facts, in our opinion, in assessment year 2011-12, the Assessing Officer was not justified in holding that the assessee company did not start any business either during the year or prior to the year under consideration. Whether the advancement of money to the subsidiary can be said to be for the purpose of business? - ‘commercial expediency’ - Held that:- The assessee is in the business of establishing, commissioning, setting up, operating and maintaining power projects. That its subsidiary GVL had also similar objects. The assessee tried to pursue its objects through its subsidiary GVL and submitted a bid for a power project abroad. Therefore the ratio of the above decision of Hon'ble Jurisdictional High Court in the case of Modi Entertainment Ltd. would be squarely applicable. In the case of S.A. Builders Ltd. (2006 (12) TMI 82 - SUPREME COURT) held that the expression ‘commercial expediency’ is one of wide import and includes such business expenditure as a prudent businessman incurs for the purpose of business. After considering the facts of the case, we are of the opinion that the advancing of money to GVL for setting up of the power project was driven by commercial expediency and therefore, was for the purpose of business. - Decided against revenue.
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