TMI Blog2012 (4) TMI 448X X X X Extracts X X X X X X X X Extracts X X X X ..... O – Tribunal treated expenditure incurred in respect of leasehold premises on account of electrical work, wooden partitions, laying down of cables, false flooring etc and consultancy to architect makes no addition of extension of the premises taken by the assessee on lease as nothing was added to the profit making apparatus hence no merit in the treating all such expenditure as capital in nature - Held that:- Break up and particulars regarding the expenditure is not available and referred to and no information about the said expenditure was towards purchase and installation of air conditioners/air conditioning plant, furniture etc- Since the factual details have not been considered by the tribunal - set aside the findings recorded by the tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal. The first issue relates to the date on which the business of the respondent assessee was set up. The Assessing Officer has held that the business of the respondent assessee was set up on 1st June, 2001. The Assessing Officer, therefore, disallowed expenses to the extent of Rs.19,37,773/-, which include salaries, wages, bonus, staff welfare expenses, recruitment and training etc. for the period prior to 1st June, 2001. Similar expenses have been also disallowed on power and fuel, i.e., electricity and water. 4. On the said aspect/question, we find that the tribunal has dealt with the issue in depth and has recorded several factual findings. We would like to reproduce here paragraph 6 of the order passed by the tribunal, which reads ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of Whirlpool of India Ltd.- 19 SOT 293 observed that there may be integregrum(sic) between setting up of business and date of commercial commencement of business, but under the Income Tax Act, all the expenses incurred after the date of setting up of business are to be allowed as a deduction while computing the income u/s 28. The Hon ble Bench in this case held that where the assessee company has appointed branch manager and regional manager in 1995, paid salaries including PF contribution etc. beginning from November, 1995, its business can be said to be set up from 1.11.1995 i.e. the date on which the company was in a position to commence its business, and not on 1.2.1996 when its bank account was opened. The instant case before us i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer in this connection referred to Explanation 1 to Section 32(1) of the Act and held that the said expenditure was capital expenditure and on the said expenditure depreciation as per law could be claimed. The CIT(Appeals) has affirmed the said finding. The tribunal in the impugned order after recording the contentions raised has held and given the following reasoning to allow the appeal:- 9. We have considered the rival contentions and found from the record that expenditure was incurred in respect of leasehold premises on account of electrical work, wooden partitions, laying down of cables, false flooring etc. There was no addition of extension of the premises taken by the assessee on lease. The expenditure was incurred by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing capital in nature. 8. Having heard learned counsel for the parties, we frame the following substantial question of law with regard to the second and third aspect: Whether the order of the Income Tax Appellate Tribunal reversing the findings given by the Assessing Officer and the CIT(Appeals) that the expenses of Rs.47,38,979/-, Rs.15,89,625/- and Rs.6,18,960/- were capital expenditure is correct and as per law? 9. A reading of the aforesaid findings recorded by the tribunal would show that it has not discussed the exact nature and character of the expenses. We may note that the expenses involved are substantial, i.e., Rs.47,38,979/- and Rs.15,89,625/-. We have also noticed that the assessee had taken premises on rent with eff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considered by the Assessing Officer and then by the CIT(Appeals). The CIT(Appeals) has in fact stated that this expenditure was in connection with the transfer of assets and liabilities from Dantal Hydraulics Limited and, therefore, should be treated as a part of cost of acquisition of the business/asset. We accordingly pass an order of remit with a direction to first examine and decide the factual aspects. The question of law mentioned above is accordingly answered in negative, i.e., in favour of the Revenue and against the assessee. 11. The fourth issue raised by the Revenue pertains to software, which was purchased vide invoice of the 20th March, 2002. The Assessing Officer held that the invoice was purchased at the end of the account ..... X X X X Extracts X X X X X X X X Extracts X X X X
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