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2010 (9) TMI 1091 - KARNATAKA HIGH COURTSubstantial questions of law - expenditure incurred for setting-up of the construction business - allowed as a deduction - No actual business activity - expenditure incurred allowed as a business expenditure - HELD THAT:- depending upon the nature of the work and who has undertaken the work, one has to look into the material placed and then come to conclusion what exactly would be the commencement of work. If integral part of business requires expenditure, it would mean without the said integral activity, the main business cannot be proceed with. Therefore, whenever such expenditure is claimed, the criterion would be what exactly is the nature of business the assessee has undertaken and depending upon the nature of business, one has to see whether such expenditure was spent towards integral part of the business or not. When once it becomes integral part of business like the case on hand, expenditure towards soil testing, submission of tenders, payment of architect fee, etc. would be integral part of the business of the assessee. Therefore, the CIT(A) was justified in the present appeal in saying that commencement of business does not mean actual commencement of construction work but it means whatever is required to start the construction work prior to undertaking the construction work. If it is integral part, it has to be held as commencement of work. Therefore, the expenditure sought by the assessee for the above activity was rightly held as integral part of the construction industry as the very nature of business in the construction needs such expenditure and without such expenditure they cannot proceed with the actual work they undertake. Therefore, the substantial questions which were raised in the above case are answered against the Revenue.
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