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2016 (7) TMI 679 - CALCUTTA HIGH COURT

2016 (7) TMI 679 - CALCUTTA HIGH COURT - [2016] 385 ITR 404 - Expenditure towards bank charges - revenue or capital - when did business is set up? - Held that:- We are of the opinion that the view taken by the learned Tribunal treating the expenditure towards bank charges as capital expenditure 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 t .....

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titioner : 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 expenditure towards bank charges of ₹ 6,79,331/- related to the new project i.e. resta .....

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eflsame business where common books of account and common bank account are maintained by the assessee for the above expansion. We have heard Mr. Sen, learned advocate appearing for the appellant/assessee. He drew our attention to a judgment in the case of Khimji Visram and Sons (Gujarat) Private Limited vs. Commissioner of Income-Tax, reported in [1994] 209 ITR 993 [Guj.]. He drew our attention to a passage quoted by the Gujarat High Court from the judgment in the case of Western India Vegetable .....

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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 t .....

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e business is set up, the expenditure incurred is deductible under Sections 36 and 37 as the case may be. But before the business is set up, the expenditure cannot be admissible for deduction. He also drew our attention to a judgment of the Apex Court in the case of CIT vs. Sarabhai Management Corporation Ltd., reported in [1991] 192 ITR 151 [SC]. He drew our attention to the following findings of the Apex Court : Even if, as submitted by Dr. Gauri Shankar, the first category of activity referre .....

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