TMI Blog2016 (2) TMI 664X X X X Extracts X X X X X X X X Extracts X X X X ..... see was into the business of leasing/sub leasing the franchise rights. Thus CIT(A) properly allowed the business expenditure - Decided in favour of assessee - I.T.A .No.-2800/DEL/2012 - - - Dated:- 15-1-2016 - SHRI INTURI RAMA RAO ACCOUNTANT MEMBER AND SMT SUCHITRA KAMBLE, JUDICIAL MEMBER For The Appellant : Sh. Raman Kant Garg, SR. DR For The Respondent : Sh. Rupesh Jain, Adv. ORDER PER SUCHITRA KAMBLE, JM This appeal is filed by the Revenue against the order dated 2/3/2012 passed by the Ld. CIT(A) s VI, New Delhi. 2. The grounds of appeal are as under:- 1. The Ld. CIT(A) has erred on facts and in law in deleting addition made by the A.O amounting to ₹ 5,24,17,631/- on account of business expendit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urchase of goods, etc, and hence the provisions of clause 28(a) are not applicable to the Company. (i) Opening Stock (ii)Purchases during the year; (ii) Sales during the previous year; (iii) Closing Stock; (iv) Shortage/excess, if any With these observations the A.O requested the assessee company to explain as to why business loss claimed should not be disallowed. In response to the show cause notice, the assessee company explained that during the relevant assessment year, the assessee acquired an office premises w.e.f. 1/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e shown by the assessee company in its profit and loss account as income from other sources , and completed the assessment under section 143(3) of the Income Tax Act, 1961 vide order dated 10/12/2010. Aggrieved by the disallowances and additions made in the assessment order, the assessee filed the appeal before CIT(A). 5. The CIT(A) held as under: However, whether business is set-up and ready to commence is a matter of fact which is to be examined in light of facts of each case. In the present case, the appellant, who is in the business of providing business franchisee rights, has received the authorization from Carrefour group to sub-franchise the rights, has hired the requisite staff and directors, taken and evaluated necessary p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sdictional Delhi High Court), it can be said that the key business activity of the appellant has started. 5.4 Based on the above principles laid down by the Hon ble Supreme Court and Hon ble High Court and the facts of the present case, it is clear that the business of the appellant was set up since incorporation as it was having Carrefour Franchise Right and the expenses claimed by it for carrying out search for potential franchisees are expenses incurred post set up of business and are allowable as business expenditure. The AO grossly erred in understanding the facts of the assessee s case by saying that the appellant is a trader and passing his order accordingly, despite the fact that all the evidence were placed on record which pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the expenses claimed by it for carrying out search for potential franchisees are expenses incurred post set up of business and are allowable as business expenditure. The AO erred in understanding the facts of the assessee s case by saying that the assessee is a trader, despite the fact that all the evidence were placed on record which proved that the assessee was into the business of leasing/sub leasing the franchise rights. Thus CIT(A) properly allowed the business expenditure of ₹ 5,24,17,631/- for A.Y. 2008- 09. Besides that the case is fully covered by the assessee s group company (Carrefour WC C India Pvt. Ltd. Vs. DCIT ITA No. 42/2014 decided on 22.09.2014) decided by the Hon ble Delhi High Court. In view of the finding here ..... X X X X Extracts X X X X X X X X Extracts X X X X
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