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2012 (12) TMI 525 - AT - Income TaxDetermination of cut-off date to determine pre-operative expense – AO's view is that date of commencement of business is the date of set up of business and such date is relevant to determine the nature of expenditure incurred – Assessee's view is that date of set up of the business is when some consultants were appointed for advice about the feasibility – Held that:- As revenue expenses incurred after the setting up of business and prior to its commencement are an allowable expense. Mere appointment of consultants, in itself does not mean anything in line of business. There are host of other activities which are required to be undertaken/ performed before the business can be stated to have actually been set up line of business. - even the road show conducted for launching of the project were only promotional activities and are therefore pre-operational in nature. The date of setup of the business should be 1.1.2003 and hence all the expenses which the assessee has incurred after 1.1.2003 whether on the payment of consultants or on rent or on staff salary or all other expenses of revenue nature etc. should be allowed as deduction, as against from 7.3.2003 taken by the Assessing Officer. All expenses incurred form 1.4.2002 to 31.12.2002 should be treated as pre-operative expenses and should be capitalized on which the assessee is entitled to get depreciation at the applicable rates. - Order of CIT(A) sustained.
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