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2016 (7) TMI 679

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..... the business has actually been set up. Business was admittedly set up on 7th May, 2006 when it started its business, or may be on 6th May, 2006 when it was ready for starting its business. - Decided in favour of revenue - ITA 126 of 2011 - - - Dated:- 13-6-2016 - Girish Chandra Gupta And Asha Arora, JJ. For the Petitioner : Mr. Ananda Sen, Adv. Mr. Dipak Dey, Adv. For the Respondent : Mr. R. N. Bondhopadhyay, Adv. Mr. S. B. Saraf, Adv. ORDER The Court : The subject matter of challenge in the appeal is a judgment and order dated 6th August, 2010 by which the learned Income Tax Appellate Tribunal B Bench, Kolkata in ITA No.2015/Kol./2009 pertaining to the Assessment Year 2006-07 concurring with the CIT(A) held that .....

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..... ces and any expense incurred prior to the setting up of a business would not be a permissible deduction. When a business is established and is ready to commence business, then it can be said of that business that it is set up; but before it is ready to commence business it is not set up. There may, however, be an interval between the setting up of the business and the commencement of the business and all expenses incurred during that interval would be a permissible deduction. (emphasis* supplied). Mr. Sen submitted that the learned Tribunal has refused to allow the expenditure simply on the ground that the hotel was opened on 7th May, 2006, that is to say, after the end of the relevant previous year. That is no doubt true. But, it was .....

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..... or the period required for acquisition of the property is said to be a period during which revenue expenditure is not deductible. In the case before us, during construction of the hotel it cannot be said that the acquisition of the hotel was completed. For the aforesaid reasons, we are of the opinion that the view taken by the learned Tribunal does not require any interference. The fact that the assessee was already in business or that the assessee had gone in for expansion of the business by diversifying it, does not alter the situation that the hotel business was a new business undertaken by the assessee. Any expenditure incurred for that business has to be allowable in accordance with law. That eventuality cannot arise unless the busi .....

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