Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2018 (9) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (9) TMI 621 - AT - Income TaxExpenses allowability when the business has not been set up - whether the business to be assumed to be set-up notwithstanding the fact that the actual commencement of the business has not taken place? - Held that:- It is undisputed fact that the assessee has not reflected any major income from business activities during the impugned AY except Income from Deputation for ₹ 5.39 Lacs. However, the earning of the business income, in our opinion, was not a sine qua non to enable the assessee to claim the business expenditure as per statutory provisions provided other conditions as envisaged by law were fulfilled by the assessee. Upon perusal of nature of expenses incurred by the assessee, we find that the out of total expenditure of ₹ 14.67 Crores, the major expenses pertains to staff expenses for ₹ 4.85 Crores, sales, administration & other expenses for ₹ 7.28 Crores and amortization of intangible assets for ₹ 1.65 Crores which demonstrate that the assessee had already recruited employees during the impugned AY and incurred various administrative and sale expenditure. As rightly noted by Ld. CIT(A), the assessee had participated in three bids during the impugned AY, out of which one bid was successful which is not disputed by the revenue. The aforesaid factor raises a strong pointer in assessee’s favor that the assessee was ready with all the necessary infrastructure to deliver the proposed goods / services to the prospective customers. Another noteworthy factor is that this is not the first year of assessee’s existence since the documents on record reveal that the assessee had filed return of income for immediately preceding AY 2008-09 also wherein it has, on identical factual matrix, claimed business expenditure in that year and carried forward business losses to the extent of ₹ 5.06 Crores, which has not been disputed by the revenue at any point of time so far. - decided in favour of assessee.
|