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2014 (4) TMI 999 - AT - Income TaxDisallowance of loss claimed under Chapter IV-D of the Act – Company only at setting up stage - Whether the assessee company can be said to have set up its business during the relevant year and, if so, when – Held that:- The company claims to have appointed MD as well as Chief Operations Manager, putting the infrastructure in place by acquiring office premises, staff, furniture and fittings, etc. - No grant of any operational lease by the year end should not be of any consequence - if the infrastructure has indeed been set up and the company is in position or is ready to grant operational leases, which is to comprise its principal business and that toward the commencement of which line of business efforts were made, it can be said to have set up its business - the assessee’s case is wholly unsubstantiated - The only material on record is toward the appointment of MD, even though there is some doubt in its respect inasmuch as the resolution by the Board of Directors of the company confirming his appointment is dated 17.02.2007. No proper answers emanate from either the material on record or the assessee’s explanations, with the expenses as incurred itself revealing the state of preparedness of the company toward commencing its business can be taken out - the company is clearly in the setting up stage - it is only the expenditure, post set-up, that could be claimed as a business expenditure, while the company has claimed the entire expenditure incurred by it since inception, including as it appears expenditure on its’ incorporation itself, which are only capital costs - No case for allowance of the assessee’s claim u/s. 37(1) or section 32(1) is made out – Decided against Assessee.
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