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2015 (2) TMI 942 - AT - Income TaxPre commencement expenditure disallowed - Held that:- It is an un-denied fact that the assessee company was incorporated in 2008 and in the interim period the business was dormant but the assessee had advanced its funds to acquired certain real estate for development. To come to a conclusion that expense shall be allowed only when there is corresponding income, is only a wishful thinking by the revenue authorities. The revenue authorities could not at any stage derail the assessee’s argument that the business had been set-up. The phrase set-up has been distinguished from the phrase start up by various fora in various judicial decisions. Thus the amount of ₹ 28,89,560/- deserves to be allowed as revenue expense, as the assessee had already undertaken the course of business. - Decided in favour of assessee. General Reserve held as share premium amount by the revenue authorities - whether share premium is an amount which could be brought to tax as canvassed by the revenue authorities or independently, it is an item in the capital field, which otherwise would not be taxable? - Held that:- Simply going with the facts of the case, the revenue authorities could not have brought to tax the amount in question, because, the income so disputed never belonged to the assessee, as the assessee did not exist at the time, when the income was actually generated. It changed hands, it went to individual persons, named earlier. The amount actually came into the account books of the assessee as per the order consequential to the scheme approved by the Hon’ble Bombay High Court. Undisputedly it was a case of amalgamation, wherein, as seen from the order of Hon’ble Bombay High Court, the amounts collected as share premium by those three companies were ordered to be brought into the books of the assessee either as General Reserve or as Goodwill. This amount was shown by the assessee company in the General Reserve. The receipt in the hands of the assessee shown as General reverse could not be brought to tax. This for two reasons (a) the receipt does not carry the character of income under any provision of the Act, and (b) it became a receipt in the hand of the assessee on a specific direction of Hon’ble Bombay High Court, relevant portion, as extracted earlier in the order. Thus revenue authorities cannot change the character of receipt from General Reserve to share premium Reserve and tax the same u/s 56(1). - Decided in favour of assessee.
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