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2018 (10) TMI 1022 - AT - Income TaxDisallowance of expenses incurred prior to the commencement of commercial operation - allowable busniss expenses u/s 37 - whether the assessee has commenced its business commercially or not? - Held that:- As per the AO the business did not commence during the previous year, therefore, no expense incurred by the assessee can be allowed in the year under consideration. The view taken by the AO was subsequently confirmed by the CIT(A). From the preceding discussion, we find that the business of the assessee was setup during the year under consideration. This submission of the assessee has not been challenged by any of the lower authority. Therefore, we can draw a conclusion that the business of the assessee was setup in the year under consideration meaning thereby, it was ready for commercial operation. We also note that in the immediate succeeding assessment year the assessee has shown in its books of accounts the income from the business. Therefore, we hold that the business of the assessee was set up during the year. Accordingly the assessee was eligible for deduction of the expenses incurred by it during the year under consideration. In the case in hand, we note that the assessee has recruited the employees and incurred the salary expenses therefore, the ratio laid down in the preceding orders are squarely applicable to the facts of the case in hand. Therefore, respectfully following the same we reverse the order of authorities below. - Decided in favour of assessee.
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