TMI Blog2013 (10) TMI 880X X X X Extracts X X X X X X X X Extracts X X X X ..... n facts and the nature of the business - In case of real estate business, the said setting up of business was complete when first steps were taken by the respondent-assessee to look around and negotiate with parties. There can be a gap between setting up and when first steps were taken by the respondent and finalisation of the first written agreement. Business activities of the respondent did not require construction of a factory, machinery etc. Negotiations are required to enter into a written understanding and it is obvious that the loan was taken for business and to proceed further and conclude the deal – Deduction of interest allowed u/s 36(1)(iii) – Decided against the Revenue. - Income Tax Appeal No. 41/2013 - - - Dated:- 8-10-2013 - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s builders, colonisers, developers, promoters, proprietors, occupiers, lessors, interior decorators, civil contractors, maintainer of residential, commercial and industrial buildings, colonies, mill s and factory s sheds and buildings, workshop s buildings, hospitals nursing homes, and to deal in all kinds of immovable properties whether belonging to the Company or not. 2. To undertake and carry on the business of purchasing, selling and developing any type of land or plot whether residential, commercial, industrial, rural or urban that may belong to company or to any other person of whatever nature and, to deal in land or immovable properties of any description or nature on commission basis and for that purpose to make agreements to se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terms and conditions and to do the consultancy business in the construction and allied activities. 5. In Western Indian Vegetables Products Limited versus CIT, (1954) 26 ITR 151, Bombay High Court had examined the concept and noticed the difference between commencement and setting up of business and it was observed as under:- The important question that has got to be considered is from which date are the expenses of this business to be considered permissible deductions and for that purpose the section that we have got to look to is section 2(11) and that section defines the previous year and for the purpose of a business the previous year begins from the date of setting up of the business. Therefore it is only after the business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2006-07. It had entered into a Memorandum of Understanding dated 31st May, 2006 with third parties in respect of a project near Chandigarh, Mohali, Punjab. Subsequently, joint venture agreement dated 5th July, 2006 was executed between the respondent and third parties. The said factual positions are not disputed. Loan of Rs.25 crores was taken by the respondent-assessee on 16th May, 2006. We do not think that the date of joint venture agreement, i.e., 5th July, 2006 should be and can be as a date of setting up of business. This is the second year of operation and for the earlier year, i.e., Assessment Year 2006-07, return of income was filed on 29th November, 2006 declaring business loss of Rs.6612/-. Date of setting up of business depends ..... X X X X Extracts X X X X X X X X Extracts X X X X
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