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2015 (10) TMI 1873 - ITAT DELHI

2015 (10) TMI 1873 - ITAT DELHI - TMI - Allowance of pre-operative expenses against the income from other sources - setting up off business losses against the income under the head 'income from other sources' - Held that:- The Assessing Officer had not determined the business losses by holding that the respondent assessee company had not commenced his business operations and he doubted the trading activities carried on by the assessee company on the ground that the trading activity allegedly had .....

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t if the expenditure claimed is directly relatable to the trading activity, the same may be allowed as a business loss which can be set off against the income from other sources. With these directions, the appeal filed by the Revenue is partly allowed for statistical purposes. - ITA No. 2806/Del/2013 - Dated:- 8-7-2015 - G. C. Gupta, VP And Inturi Rama Rao, AM,JJ. For the Appellant : Shri Gaurav Dudeja, Sr. DR For the Respondent : Shri V K Jain, CA ORDER Per Inturi Rama Rao, AM. 1. This is an ap .....

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ndent assessee is a company duly incorporated under the provisions of Companies Act, 1956. It is engaged in the business of manufacturing, trading and sale of alcoholic beverages, mainly beer for domestic consumption. During the year under consideration, the respondent assessee was in process to establish the industry for manufacturing of beer. That apart, the respondent assessee claimed that it had carried on their trading activity during the year under consideration. The return for the assessm .....

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surplus funds. The Assessing Officer doubted the veracity of the claim made by the respondent assessee company that it was engaged in the business of trading in the alcoholic beer and hence the expenses claimed to the tune of ₹ 2,72,89,991/- were disallowed and the interest earned of ₹ 33,88,051/- was brought to tax under the head income from other sources. Being aggrieved from this order of assessment, the respondent assessee preferred an appeal before the learned CIT(A)-XV, New Del .....

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xpenses were to be capitalised by making an incorrect observation that the appellant was setting up a manufacturing plant. It is evident that the appellant has carefully identified expenses attributable to manufacturing of beer through 3rd party collaborative arrangement, and capitalised expenses worth ₹ 52,75,832. The balance amount which did not relate to the collaboration has been claimed as routine business expenditure of the company. The AO had questioned veracity of High Sea Sales of .....

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plant, could be set off against the interest income of the appellant. On careful appreciation of the details furnished by the appellant and the basis for its allocation into true operative expenses and business expenses, I am satisfied with the accounting treatment given by the appellant whereby only such expenses which were directly linked to the collaborative arrangement with DSPL were capitalised and held as pre-operative expenses while the other expenses were held for the business purposes .....

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ot; 7. Statistically, the appeal is allowed. 3. Aggrieved by this order, the Revenue had come up with the present appeal. 4. Learned DR vehemently argued that the claim of the assessee company is bogus, inasmuch as, the sales were made much before the purchases and he drawn our attention to page no. 80 of paper book filed wherein a copy of the invoice is placed. From this invoice, it is clear that the invoice is dated 5th February, 2008 and he submitted that the transaction of purchase and sale .....

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