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2019 (10) TMI 509 - AT - Income TaxDeletion of disallowance of business expenses of ₹ 188.75 lakhs made by the AO - pre-construction expenses - HELD THAT:- Since the assessee is in the process of implementing a project, which is in the nature of Construction of project, the question of examining the “setting up of business or commencement of business” does not arise in this case. Since the assessee is constructing a project, all the expenses are incurred in connection there with are called pre-construction expenses and they are required to be capitalised as per the decision rendered by Hon’ble Supreme Court in the case of CHALLAPALLI SUGARS LIMITED & HINDUSTAN PETROLEUM CORPORATION LTD. VERSUS COMMISSIONER OF INCOME-TAX, AP & COMMISSIONER OF INCOME-TAX (CENTRAL) , CALCUTTA [1974 (10) TMI 3 - SUPREME COURT]. The Ld A.R has raised a new contention that the “other income” should not be assessed separately, but it has to be reduced from the pre-construction expenses. However, this claim of the assessee requires examination of facts relating to “other income” and also the law explained by Hon’ble Supreme Court/High Courts in this regard, which is also dependent upon the facts relating to “Other income”. The assessing officer did not examine this claim of the assessee with regard to other income, even though he has observed that the expenses can be capitalised - Accordingly, this claim of the assessee requires examination at the end of the AO - the issue is restored to the file of the AO for examining the above said claim of the assessee. Appeal allowed by way of remand.
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