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2013 (11) TMI 185 - ITAT MUMBAIDisallowance of Administrative and Other Expenses as pre-operative expenses – Whether the CIT (A) erred in confirming the action of the AO in disallowing the administrative and other expenses - Held that:- The business should be construed set up as the assessee obtained necessary approvals, recruited requisite personal, procured requisite machinery etc. – Following CIT v. Saurashtra Cement & Chemical Industries Ltd. [1972 (8) TMI 19 - GUJARAT High Court] - the assessee had successfully identified certain mineral rich blocks too - the expression 'setting up' means 'to place on foot' or to establish or 'to ready to commence' - the assessee's business was set up in this year and in fact commenced too - The arguments of the assessee were valid and the claim of the assessee in respect of the debiting the sum to Profit and Loss account in this year is proper - describing the expenditure as pre-operative ones was incorrect. Nature of Interest Receipts and Tax Treatment - Charging of Interest u/s 234B OR 234C - Whether the CIT (A) erred in confirming the action of the AO for taxing the interest income under the head "income from other sources" – Held that:- The interest receipts are earning after set up of the business of assessee - Therefore, this issue requires fresh adjudication considering our finding on the main issue discussed and adjudicated above i.e. whether the business of assessee is set up in the year under consideration or not – Following Commissioner of Income-Tax Versus Bokaro Steel Limited [1998 (12) TMI 4 - SUPREME Court] - the business is set up in the year under consideration and the expenses as an allowable expenditure in the year under consideration. As such, the orders of the Revenue do not contain requisite details on the source of the funds kept with the banks which yielded interest income and the details related to the source of these funds kept with the Banks i.e interest bearing funds/non-interest bearing funds/excess funds or otherwise own funds of the assessee etc. In the set aside proceedings, AO is directed to examine these issues afresh and adjudicate the same.
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