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2023 (10) TMI 1200 - HC - Income TaxExpenses incurred at pre-operative stage disallowed - expenditure commenced between the date when the business was set up and the date when the business was commenced - ITAT deleted the addition - HELD THAT:- Tribunal, according to us, noticed quite correctly that there is a distinction between the date when the business was set up and the date when the business was commenced. The expenses incurred between these two dates have rightly been categorized as revenue expenditure. Therefore, the Tribunal proceeded to sustain the view taken by the CIT(A), insofar as the first issue is concerned. We may note something which appellant/revenue, has brought to our notice, that since the pre-operative stage period spilled over to two succeeding years as well, the matter came up before the AO and that the AO made no addition with regard to the expenses incurred during this period. As following the principle of consistency, in our view, no substantial question of law arises, insofar as the first issue is concerned. Income from other Sources - interest was earned on fixed deposit created out of surplus funds, which were used for the execution of the project - HELD THAT:- Tribunal correctly deleted the addition made with regard to the interest as it is held when it is proved that the assessee has set up the business, earned the income from interest during the construction period and has set off the same against the loss under the head PGBP as per section 71 CIT(A) has rightly deleted the addition as the funds parked in the bank on which interest has been earned were inextricably linked with the setting up of the hospitability business - no substantial question of law.
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