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2019 (4) TMI 1309 - ITAT HYDERABADAllowability of administrative expenditure as business expenditure - proof of set up of business - Commencement of operations - CIT(A) in her findings held that assessee has not set up its business, but it had applied for change of its main objects as well as approval for setting up the business of news channel. She observed that mere application is not enough, but, it has to show that the requisite approval had been received before it can be said that business was set up - HELD THAT:- We are not in agreement with the observation of the CIT(A) just because assessee has not got approval before the end of the current AY, it cannot be said that the assessee has not set up its business. In our view, assessee company was already incorporated in 2000 and it has modified its objects and taken steps to get the approval from the Ministry of I&B. These are all mere approvals required for commencement of the revenue for the business. However, it has to have infrastructure in order to put in place all the facilities as soon as approvals are granted. As we observed earlier, assessee has taken up a place to set up all the above business as well as recruited about 30 employees to carry out the above objects. In that process, it has installed, power, basic machinery, internet, leased line, uplinking and administrative activities, such as collection of news etc. Assessee has made basic infrastructure in order to commence its business. AO has confirmed that assessee has shown income in subsequent AY i.e. AY 2013-14. It does indicate that assessee has received relevant approvals and commenced its business activities in the subsequent AY. Further, it indicates that without basic set up or infrastructure assessee would not have achieved running its activities in subsequent AY itself. Therefore, in our view, assessee has set up its business and commenced its operation in the subsequent AY i.e. 2013-14. Assessee has already set up its business and is eligible to claim basic administrative expenditure as business expenditure in the AY under consideration. - Decided in favour of assessee
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