TMI Blog2013 (4) TMI 780X X X X Extracts X X X X X X X X Extracts X X X X ..... erred to as JV ) arrangement with Essar Projects Limited (hereinafter referred to as EPL ) on 9th February, 2001 entered into infrastructure construction industry in India. UEM along with its JV partner had secured three highway projects in India, namely, Package 2, 4 and 5 for the purpose of improving and fourlaning part of the Tumkur Haveri National Highway under a contract awarded by the National Highway Authority of India (hereinafter referred to as NHAI ). Through a supplementary arrangement, UEM and EPL have mutually agreed that package 2 will be executed by the UEM while Package 4 and 5 will be executed by EPL. 3.1 The Engineering, Procurement and Construction (hereinafter referred to as EPC ) contracts for the aforesaid project (i.e. Package 2) was in turn awarded to the assessee. The assessee on 10th January, 2002, has secured two more construction contracts, the details of the same are as follows:- (i) EPC contract from M/s GMR Tuni Anakapalli Expressways Private Limited for stretch of NH5, a project envisaging strengthening of the existing 2 lanes from Km.300/0 to km.359/20 and widening thereof to 4 lane dual carriageway. (ii) EPC contract from M/s GMR Tamab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the parent company (UEM) entered into MOUs with GMR and EPL to form a consortia to submit bids to NHAI. These consortia were awarded two projects (Package 2-4-5 and TT/TA) and in turn they set up special purpose vehicles for the execution of the same. The present appellant one is of the special purpose vehicles to execute some of these projects and was accordingly incorporated on 19-09-2001. It leased some lands for a site camp vide its lease deed dated 01-02-2002 [Sl. No.8 of the Matrix above] and entered into some correspondence with the Minor Irrigation Department, Karnataka for use of tanks as borrow areas. It is to be noted that this letter of 21-02-2002 is also only a proposal and not a confirmation of the approval received from the Minor Irrigation Department [Sl. 12 of the Matrix above). At Sl. Nos.9, 10 11 of the matrix, the appellant cites some letters between the original contractor and the project management consultant (Louis Berger Group). Significantly, these concern modalities for handing over the land and it is seen from the letter of 19-09-2002 from the NHAI that the possession of the land from Km 122.3 to Km 189 of NH4 for execution of the work was only awar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rred in confirming the view of the Assessing Officer. It was further contended that the CIT(A) has failed to take into consideration the various judicial pronouncements relied on by the assessee to augment the above contentions. It was stated that in the present case, the assessee was incorporated on 19th September, 2002 and entered into contracts on 10/1/2002 and even employed its first employee on 15th January, 2002, which shows that it is ready commence its business. The learned AR submitted summary of series of events relating to the set up of business of the assessee (which is reproduced at page 6 of the impugned order of the CIT(A)). For the proposition that the assessee had set up the business and was ready to commence its business would suffice for allowance of claim of deduction of the expenditure that is debited in the P L account, the assessee has relied on the judgments of the Hon'ble jurisdictional High Court in the case of CIT v. MFAR Construction Ltd. [2010] 48 DTR 360 (Kar.), Hon'ble Madras High Court in the case of CIT v. Franco Tosi Ingegneria [2000] 241 ITR 268 (Mad.), Hon'ble High Court of Delhi in the case of Dhoomketu Builders Development (P) Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... commence would not necessarily mean that all the integrated activities are fully carried out and/or wholly completed. The requirement is also complied with in a given case where an assessee had undertaken the first of the kind of integrated activities which the business is overall comprised of. It is not necessary that all the categories of its business activities must start either simultaneously or that the last stage must start before it can be said that the business was set up. What is material is the date when the company went into or started one or the other of its component activities. 10.2 The Hon'ble jurisdictional High Court in the case of MFAR Construction Ltd. (supra) had drawn a distinction between setting up of business and commencement of business. The Hon'ble High Court was considering the following questions of law:- 1. Whether the appellate authorities were correct in holding that even when no business activity of the assessee had commenced during the current assessment year which finding of the Assessing Officer has been accepted by both the appellate authorities that the expenditure incurred for setting-up of the construction business should be a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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