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2018 (11) TMI 1656 - AT - Income TaxDisallowance u/s. 37(1) - set up business - HELD THAT:- To demonstrate that the business of the assessee company has been set up the assessee company has submitted the following details during the course of assessment proceedings:- “(a) Collector Order dtd.15.04.2011 (in Gujarati and its English Translated version) for the financial year 2011-12 ; (b) Details of the Tender floated for the purpose of infrastructure work ;(c) Details of major infrastructure works for which Letter of Intent was issued to the contactors in FY 2011-12” The assessee company has also issued Letters of Intent to various contractors in respect of carrying out work related to its business such as notice to commence work for construction, operation and maintenance of water pumping station for water supply to GIFT zone, notice to commence work for power supply arrangement for GIFT project and notice to commence work for pipe network for bore-well connection for GIFT project. The assessee has also submitted work completion certificates of these contractors. During the course of assessment year 2012-13, the assessee company has prepared its profit and loss account for the first time since its operation disclosing interest document fees, license fees, scrutiny fees and water charges and claimed deduction of various administrative office expenses. Subsequently, the assessee company has also claimed deduction of depreciation by filing revised return of income. CIT(A) has also referred the decision of Saurastra Cement and Chemical Ltd. vs. CIT [1972 (8) TMI 19 - GUJARAT HIGH COURT] wherein it is held that the business would commence when the activity which is first in point of time and which must necessarily precede the other activity is started. As soon as a activity which is an essential activity in the course of carrying on the business or which in other words is a business activity is started the assessee must be held to have commenced the business. The nature of business of the asssessee company was to develop various common facilities and the material facts as elaborated in this order substantiate that the business of the assessee company was set up during the year under consideration. We observe that all these evidences clearly demonstrate that the business of the assessee had been set up during the year under consideration. Claim of depreciation - it is established that the business of the asssseee company was actually commenced in the assessment year 2012-13, therefore, the ld. CIT(A) has rightly adjudicated that the assessee company was entitled to claim deprecation on account of plant and machinery which includes office equipment and vehicle, computer, computer software and furniture, fixture used for the purpose of business. Therefore, we do not find any merit in this ground of appeal of the revenue.
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