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2012 (7) TMI 61 - AT - Income TaxDisallowance of expenditure including depreciation as business expenditure - on the ground that no business activity had been undertaken during the year - asseessee-company has undertaken a project of providing infrastructure facilities - Development work for Phase II was proceeding satisfactorily, and had reached 90% completion - report dated 21-12-2002, the Board of Directors of the assessee company, commenting on the present status of the project, state that Phase I of the project is complete, though the licence for distribution of power is awaited – Held that:- no business activity had been carried out during the relevant previous year, and all the activities undertaken were only in the nature of setting up of business - assessee is not entitled to a set off of the administrative expenditure incurred as business expenses u/s 71(1) of the Act – Power of the ITAT to consider the issues not raised before it - held that:- The same would necessarily require of us to issue a finding as to the date of the commencement of business in the present case, or at least the basis for its determination, and which would be valid for all the years under reference. Also, it is well settled that the tribunal is fully competent to determine the actual issue arising for determination in appeal, as also allow to relief on a ground different from that being urged before it. It is well-settled that it is the correct legal position that is relevant, and not the view that the parties may take of their rights in the matter. Claim of expenditure to be set off against interest income - held that:- we are unable to see as to how the said admitted business expenditure is now being claimed as laid out wholly and exclusively for earning bank interest, so as to be deductible u/s 57(iii), qua which there is no finding by the first appellate authority in any the years, and which claim, where admitted by him, would have required a remission to the A.O., i.e., after satisfying himself that a prima facie case is made out. - Decided against the assessee. Direct or indirect cost - Architect's fee - income from sale of forms and trees can not be treated as independent of the project, and even if no costs are attributable thereto (which is impractical), or such costs stand already capitalized as part of the project cost (and not included in the impugned administrative expenditure), the same cannot be assessed as income - Held that:- Matter remanded to the file of the AO to allow the assessee an opportunity for verification of the assessee's claims
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