TMI Blog2016 (6) TMI 597X X X X Extracts X X X X X X X X Extracts X X X X ..... al. Considering the different categories of work, it can not be said that such objects could be achieved without contemplating different stages of completion.It would be wrong to uphold the contention of Revenue that only on completion of work of entire Canal, the assessee’s business can be said to have been set up. In a Project like the “Sardar Sarovar”, there are bound to be different stages where different activities take place and those activities being integral part of business and when they are set up phase wise, the assessee cannot be deprived of the benefits of fiscal legislation in disregard of the well settled principles on the issue. - Decided in favour of assessee Allowability of interest expenditure u/s.57 against the intere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) Whether, in the facts and circumstances of the case, the ITAT was right in law in holding that the appellant has not set up its business? (3) Whether, in the facts and circumstances of the case, the ITAT was right in law in not allowing interest expenditure u/s.57 of the Incometax Act against the interest income even though there is a direct and proximate nexus between the two? (4) Whether, in the facts and circumstances of the case, the ITAT was right in law in not allowing expenditure such as salaries, administrative expenses and other such expenses to maintain the corporate status of the appellant u/s.57 of the Act against the interest income ? 4. For the sake of convenience, the appeals are classified in a tabular form accor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at. For the purpose of executing the Project, a Nigam was formed by the State Government, which executed a part of the Project. As the Project was under construction, the assessee did not file returns of income for the Assessment Years mentioned herein above. Therefore, proceedings under the Income Tax Act were initiated. The Assessing Officer did not accept the case of the assessee. Ultimately, appeals were preferred before the Income Tax Appellate Tribunal, which also refused to accept the say of the assessee. Hence, these appeals. 6. We have heard learned Senior Advocate Mr. S.N. Soparkar for the assessee and learned advocate Mr. Sudhir Mehta for the Revenue. 7. Learned Senior Advocate Mr. Soparkar submitted that the expenses cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iness, it can be noted that execution of the Sardar Sarovar Project comprises of a dam across the river Narmada, canal system as also the power house at the foot of the dam and at the canal head and all other works. It can not be said that such objects could be achieved without contemplating different stages of completion. It would be wholly wrong to uphold the contention of the revenue that only on completion of work of entire canal, the assessee' business can be said to have set up. In a project like Sardar Sarovar, there are bound to be different stages where different activities take place and those activities being integral parts of the business and when they are set up phase vice, assessee cannot be deprived of benefits of fiscal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tivities, no fault can be found in the approach of the Tribunal when it held the business to have been set up without the same being commenced. The Tribunal, by elaboration sound and logical reasonings, has dealt with the entire issue. No question of law much less any substantial question of law arises. Resultantly, Tax Appeal is dismissed. 8. Mr. Sudhir Mehta, learned counsel appearing for the Revenue, submitted that the business had neither commenced nor it had been set up, as the Project undertaken by the assessee was not only for the construction of canal but, also to operate and earn income by supplying water and generating electricity. It was submitted that the assessee was not doing the construction work for somebody else but, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant at the foot of the Dam and at the canal head. To promote and facilitate navigation in the Narmada river and also for irrigation and water supply in the State. These are some objects set out in the object clause of the Memorandum of Association of the assessee. In our opinion, the activities mentioned in the object clause of Memorandum of Association do not contemplate a single activity. 10. What is to be regarded is as to whether the business of the assessee has been set up or not so that the assessee could avail benefits under the Act. Broadly speaking, the activity of the assessee could be divided into three categories ( i) Construction of Dam and related works (ii) HydroPower Plant and (iii) Narmada Main Canal. Considering the di ..... X X X X Extracts X X X X X X X X Extracts X X X X
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