2021 (2) TMI 423 - ITAT BANGALORE - Income Tax

Head Note / Extract:
Disallowance of employee benefit expenses - Allowable business expenditure - no business has not been set up - difference between the setting up of business and commencing the business - HELD THAT:- Only because there was no business receipt, it cannot be said that assessee’s business has not been set up. Since the assessee’s business is already set up and ready to commence its business activities during the previous year relevant to the assessment year under consideration, in our opinion, the assessee is entitled to the loss computed as claimed by the assessee. Accordingly, we hold that the claim of assessee towards business expenditure incurred by the assessee has to be allowed since the assessee has already set up its business and ready to commence. Allowability of set off of business loss against the interest income - contention of the assessee is that interest income has to be assessed business income only - HELD THAT:- We do not find merit in the argument of the ld. AR. The interest income earned by the assessee is from the fixed deposits which is sourced from the share capital. This interest income is to be assessed as income from other sources. However, as per section 71(1) of the Act, assessee is entitled to set off business loss with income from other sources. Being so, we direct the AO to allow the set off of business loss against income from other sources in terms of section 71 (1) of the Act.