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2022 (6) TMI 879 - AT - Income TaxAllowance of interest expenditure - Whether there is direct nexus between the debenture issued and loans advanced? - CIT(A) observed that the interest other than debenture interest to be allowed as these interest expenditures are allowable u/s.57(iii) - CIT(A) confirmed disallowance of interest paid on debenture against this assessee before us - HELD THAT:- Before us, the Ld.AR submitted that the above additional evidence filed by the assessee which are not filed before the AO and he has no occasion to examine the issue resulting to the allowability of interest, the above documents are very crucial and the issue may be remitted back to decide the same in the light of above additional evidence. We exceed to the prayer of the Ld.AR accordingly, this issue in dispute is remitted to the AO to examine the nexus between the debenture issued and loans advanced and decide accordingly. This ground of appeal is treated as allowed for statistical purposes. Disallowance of loss on reasons of non-set up of business - whether the business of the assessee has been set up or not, the assessee has to establish that the company has been already set up for the purpose of carrying on its business operation? - HELD THAT:- The assessee in this case, not established that the assessee is already set up in the business so as to commence its commercial operations and not placed any evidence to suggest that the assessee has set up the business. The financial statement clearly shows that no business has been commenced in the assessment year under consideration and the position of the assessee has been continued till the end of the previous year 2013-14 relevant to AY.2014-15. There was no work in progress in the assessment year under consideration and also in the subsequent assessment year 2015-16, which remain unchanged at NIL as the company has not commenced its business activities. In other words company has not at all completed set up of the business so as to commercially starts its operation. In such circumstances, lower authorities justified disallowing expenditure claimed by the assessee which is only a pre-operative expenditure and cannot be allowed as business expenditure in the assessment year under consideration. The Ld.AR placed reliance on the judgement of the Hon’ble jurisdictional High Court in the case of CIT Vs. GMR Energy Ltd.[2021 (6) TMI 299 - KARNATAKA HIGH COURT] which is not applicable to the facts of the present case. In view of this, the ground of appeal is dismissed.
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