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2016 (3) TMI 544 - ITAT MUMBAI

2016 (3) TMI 544 - ITAT MUMBAI - TMI - Disallowance of pre-operating expense for a “Mawa project” a new project - expenditure admissible u/s 37 - expenditure incurred for expansion of the existing business of the assessee or a new business unconnected with the existing business - Held that:- As decided in assessee's own case A.Y.2009-2010 the ice-cream and the Mawa fall in the genus of the dairy/milk products and they are covered by the nature of declared business of the assessee. As such, the i .....

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Singh For The Respondent : Shri Jitendra Jain ORDER PER RAJESH KUMAR, A. M: This appeal by the revenue is directed against the order dated 09.05.2014 of Commissioner of Income Tax (Appeals)-12, Mumbai (Hereinafter called as the CIT(A)) for assessment year 2010-11. The assessee has raised the following grounds of appeal: 1. On the facts and circumstances of the case and in law, the ld. CIT(A) erred in deleting the disallowance of ₹ 1,87,16,047/-, held as pre-operating expense for a Mawa pr .....

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p;2 relates to deletion of disallowance of ₹ 1,87,16,047/- on account of pre-operating expense for a Mawa Project . 3. The brief facts of the case are that the assessee filed its return of income on 15.10.2010 declaring total loss of ₹ 68,35,565/- which was revised on 07.03.2012 declaring a loss of ₹ 50,63,639/- which was necessitated to declare the interest income of ₹ 17,71,926/-. The book profit u/s 115JB of the Act was ₹ 1,42,90,338/-. The case of the assessee s .....

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carried on by the assessee and thus the issued the show cause notice to the assessee as why the expenditure of ₹ 1,87,16,047/- should not be disallowed as being pre-operating and pre-opening expenditure of capital in nature relating to Mawa Project . The ld. AO framed the assessment at ₹ 1,36,52,408/- under the normal provisions of the Act and ₹ 3,30,06,385/- u/s 115JB of the Act by disallowing the expenditure of ₹ 1,87,16,047/- vide order dated 10.09.2012 by rejecting th .....

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0 by holding that a similar issue came up in assessment year 2009-10 which was decided in favour of the assessee. 4. ld. AR, at the outset, pointed out that the issue in the present appeal is covered in favour of the assessee by its own order in ITA No.1051/Mum/2013 (A.Y. 2009-10) dated 28.8.2015 and therefore prayed that the appeal of the department be dismissed. Ld. DR was in agreement with the arguments advanced by the ld. AR on this issue. 5. We have heard the rival submissions and perused t .....

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s and perused the orders of the Revenue Authorities as well as the precedents cited by the Ld Representatives of both the parties. After hearing both the parties and perusal of the orders of the Revenue Authorities as well as the relevant material placed before us, our adjudication is given in the following paras. 8. Nature of Expenditure: we find that the expenditure in question undisputedly is of revenue nature. The same is evident from the nature of nominal accounts they are accounted in the .....

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is included in the expenditure claimed by the assessee. 9. New product vs New business: Memorandum of Association of the assessee provides for the following main object of the business of the assessee and the same reads as under: …to produce or cause to be produced, buy, process, grade, pack, store and sell milk products and ice-cream 9.1. From the above it is evident that the assessee is engaged in the manufacture of the dairy/milk products, ice creams etc. Accordingly, the manufacture o .....

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ce-creams, a milk-product the Cream is a dairy product composed of the higher-butterfat layer skimmed from the top of milk before homogenization. Cream being of the less dense, the same is gathered on the top of the dense milk. Therefore, it is not proper for Ld DR to argue that the ice-creams of the Baskin Robbins Brands are not the milk products. 10. Now what is the nature of the 'Mawa'? Is it a milk product or not and if fails in the scope of the assessee's business of not. The un .....

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