Tax Management India. Com
Law and Practice  :  Digital eBook
Research is most exciting & rewarding


  TMI - Tax Management India. Com
Follow us:
  Facebook   Twitter   Linkedin   Telegram

TMI Blog

Home

2016 (2) TMI 488

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... epending upon the business model and business cycle of the industry. In the present case under consideration, the business said to have set up, when it is ready or established to commence its operation. The assessee's business had commenced since incorporation and the assessee is eligible to claim the expenditure incurred for running of the business activities. Hence, the assessee is eligible for the business expenditure of ₹ 29,54,923/-. - Decided in favour of assessee Treatment of interest income - whether income from business or from other sources - Held that:- As observed above, the assessee had set up the business prior to this AY 2009-10, assessee is eligible to treat the interest income earned during this year earned out of .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... records were called and examined by him. Based on the following observation by him, he directed the AO to carry out the verifications on the below observations and redo the assessment since the AO completed the assessment without making proper verification, which was erroneous and prejudicial to the interests of revenue. a) The business of the assessee had not commenced, it is not eligible to claim expenditure. b) Interest income was erroneously considered under the head 'profits and gains of business and profession'. 4. The assessee filed its objections for the above reopening of the assessment u/s 263. In its objection, the assessee had submitted that the business had commenced and it was its fourth year of operation, it .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... d interest income should be treated as business income. The ld. AR relied on the following cases to support his contentions: 1 Western India Vegetable Products Ltd. v. Commissioner of Income-tax [1954] 26 ITR 151 (BOM.) (HC) 2 CIT v. Arcane Developers (P.) Ltd [2014]42 taxmann.com 10 (Delhi) (HC) 3 CIT V Dhoomketu Builders Development (P.) Ltd [2013] 34 taxmann.com 18 (Delhi) (HC) 4. UE Development India (P.) Ltd v. ACIT [2013] 35 taxmann.com 607 (Bang) 5 CIT v. Samsung India Electronics Ltd [2013] 37 taxmann.com 239 (Delhi) (HC) 6.CIT v. Sardar Sarovar Narmada Nigam Ltd. [2013] 37 taxmann.com 344 (Gujarat) (HC) 7 CIT v. Raliiwolf Ltd. (1980) 1211TR 262 (Bom.) (HC) 8 CIT v. Saurashtra Cement Ch .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... e its operation, for which, we refer to the case law Western India Vegetable Products Ltd., 26 ITR 151 (Bom.). Similarly, in the case of Arcane Developers (supra) date of setting up of business depends upon facts and the nature of the business. This is the reason why we have referred to the objects for incorporation of the company and the main business activities in which assessee was engaged. 9. The ratio of the judgment of Hon'ble Delhi High Court in the case of CIT Vs. Dhoomketh Builders Development (P) Ltd., (supra) are exactly similar to the present case under consideration. The ratio of the judgment is as under: 9. The Tr ibunal has observed that having regard to the business of the assessee, which is the development of .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... same with NGEF Ltd. on the same day, it shows that the assessee's business had been set-up and it was ready to commence business. The learned senior standing counsel for the revenue would, however, state that t ill the land is acquired, the business is not setup. The dif ficulty in accepting the argument is that an assessee may not be successful in acquir ing land for long per iod 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 per iod 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. The other argument of the learned standing counsel for the revenue t .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

 

 

 

 

Quick Updates:Latest Updates