TMI Blog2022 (3) TMI 462X X X X Extracts X X X X X X X X Extracts X X X X ..... PO Service industry. Since the assessee is in service industry providing IT application maintenance support services its requirement of man power and electronic equipment would depend upon the nature and type of work, i.e., type of IT application, it is getting. Hence, in the instant case, the assessee could plan its further recruitment of employees, depending upon the nature and type of work it is getting, which is essential to determine the skill set required for executing the said work. The directors have stated in the Directors' report that the nature of work required to be performed under the agreement entered with its AE would require 25 employees. In the instant case, in our view, this kind of decision is taken after setting up of business but before actual commencement of operations. Accordingly, we are of the view that the Ld. CIT(A) was not justified in observing that the assessee is in the process of setting up of business, since it has not yet completed recruitment of 25 employees. We are of the view that the assessee has set up its business during the year under consideration. Accordingly, the expenses incurred by the assessee are allowable as deduction an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... obtaining administrative approval from PCIT/CIT/PDIT/DIT. In the instant case, it is the assessee which has raised the additional ground and hence, it is the bounden duty of the assessee to ascertain and ensure that all the facts relating to the additional ground are available on record. Since the assessee is not sure whether all the relevant details relating to the additional ground are already available facts, it can only be said that the assessee has raised this ground only on presumption that the AO might not have obtained required approval. Such kind of presumptions have no place in judicial proceedings and such practice of raising legal issues by way of additional grounds without ascertaining the relevant facts unnecessarily waste the time of Court also. Hence, we are unable to admit the additional ground urged by the assessee. 4. The facts relating to the main grounds are stated in brief. The assessee company was incorporated on 17.12.2014. Hence, the year under consideration is the first year for the assessee. The assessee is engaged in the business of providing information technology application management support and BPO services to M/s. E Land Group companies. During ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss of the assessee is commencing from April 1st, 2015 only. Prior to that date, the assessee has recruited only 2 employees only, even though it is required select 25 team members. Accordingly, the Ld. CIT(A) took the view that the assessee has not created the required technological capability to start the support services during the year under consideration. Accordingly, he took the view that the assessee was not fully ready to start the services and hence it cannot be said that the assessee has set up the business during the yar under consideration. Before Ld. CIT(A), the assessee placed reliance on the decision rendered by Hon'ble High Court of Delhi in the case of OmniGlobe Information Tech India in ITA No. 257/2012 (369 ITR 1). However, the Ld. CIT(A) held that the above said decision is distinguishable from the facts prevailing in the present case. Accordingly, he dismissed the appeal filed by the assessee. 7. We heard the parties and perused the record. The Ld. A.R. took us through the financial statements relating to the year under consideration. He submitted that the assessee has already set up its office during the year under consideration by purchasing Computer eq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wing observations made by Hon'ble Bombay High Court in the case of Western India Vegetable Products Ltd vs. CIT (1954)( 26 ITR 151)(Bom):- It seems to us, that the expression Setting up means, as is defined in the Oxford English Dictionary, to place on foot or to establish , and in contradistinction to commence . The distinction is this that when a business is established and is ready to commence business then it can be said of that business that it is set up. But before it is ready to commence business it is not set up. But there may be a interregnum, there may be an interval between a business which is set up and a business which is commenced and all expenses incurred after the setting up of the business and before the commencement of the business, all expenses during the interregnum, would be permissible deduction under sec. 10(2). 10. Hence the answer to the question as to whether the assessee has set up its business or not would depend upon the facts prevailing in each of the case. We notice that, in the instant case, the Ld. A.R. has shown to us that the assessee has taken a premises on rent, employed few employees, purchased certain assets. In the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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