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2021 (12) TMI 1197 - ITAT CHENNAIBusiness loss claim - disallowance of loss as there was no sales and purchase - distinction between the commencement and setting up of the business - case of the assessee is that the assessee-company is ready for the commencement of the business and placed the order for raw material and advance also paid therefore, the loss claimed by the assessee has to be allowed - HELD THAT:- It is found that when the assessee has set up an industry by obtaining all necessary permissions and advance paid for the purpose of obtaining the raw material, the same is accepted by the A.O therefore, the raw material not reached the place of the assessee, it cannot be said that the assessee has not commenced the business. Once the assessee is setup entire business activity and waiting for the raw material, it has not reached because of various reasons therefore, it cannot be said that the assessee is not commenced his business. Hon’ble Delhi High court in the case of CIT v. LG Electronic (India) Ltd. [2005 (5) TMI 30 - DELHI HIGH COURT] has observed that there is a distinction between the commencement and setting up of the business beyond two dates need not necessarily overlap and section 3 refers to date of setting up of the business and as such it is only thereafter, that previous years of newly set up business would commence and, therefore, expenses incurred prior thereto could be taken into account for the purpose of determining profits of a newly set up business. In the present case, the assessee has already set up the business and it commences only once raw material reaches. The assessee has already paid advance for supply of raw materials and therefore, the loss claimed by the assessee during the year under consideration cannot be disallowed on the ground that the assessee is not commenced the business. Appeal filed by the assessee is allowed.
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