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2020 (10) TMI 648 - AT - Income TaxDisallowance of office, administrative costs and other relevant expenses as prior period expenses - non commencement of business - Whether to claim the expenditure as deduction, it is necessary to declare income under the provisions of Chapter XIV-C of the Act? - CIT(Appeals) observed that the expenditure claimed by the assessee was directly related to construction activity and it can be allowed only once the said project is completed or capable of yielding income - HELD THAT:- When the assessee in the present case was in a position to apply for the tender, borrowed money for interest albeit from its holding company and deposited the same on the same day, it shows that the assessee's business had been set-up and it was ready to commence business. Difficulty in accepting the argument of revenue stating that till the land is acquired, the business is not set-up is that an assessee may not be successful in acquiring land for long period of time though he is ready to commence his business in real estate, and that would result in the expenses incurred by him throughout that period not being computed as a loss under the head 'Business' on the ground that he is yet to set-up his business. That would be an unacceptable position. As seen from the evidence filed by the assessee, the assessee has already commenced its business by entering into agreement with the landlord and also requisite licence and permission from BBMP. It cannot be said that assessee has not commenced the business. Hence the assessee is entitled to claim deduction. Accordingly, we allow the ground raised by the assessee.
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