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2018 (12) TMI 56 - AT - Income TaxExpenses claimed prior to setting up of business - sequence of point of time when the business can be said to have been set up - Held that:- According to Section 3(1) of the Act it is setting up of the business and not the commencement of the business that is to be considered. A business is commenced as soon as an essential activity of that business is started. A business commenced with first purchase of stock in trade, the date when the first sale is made is not material in that respect. Similarly, a manufacturer has to undertake several activities in order to bring to produce financial goods and he commences his business as soon as he undertakes first of such activities. The three circumstances pointed out by the assessee before the CIT(A) viz., receipt of agency commission, travel by directors to explore the possibilities of getting business and taking the premises on lease for the purpose of manufacturing activity would be sufficient to come to the conclusion that business of assessee had been set up during the relevant previous year. Consequently, the assessee would be entitled to claim all the revenue expenses as deduction in computing its total income - The claim made by the assessee for deduction should have been allowed by the revenue authorities. Accordingly direct the AO to allow the deduction. - Decided in favour of assessee
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