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2016 (7) TMI 1082 - ITAT MUMBAI

2016 (7) TMI 1082 - ITAT MUMBAI - TMI - Deduction of expenditure incurred after setting up of the business disallowed - commencement of business - Held that:- The authorities below have not adhered to the directions of the Tribunal to allow the assessee deduction of expenditure incurred after the date of setting up of business as opposed to date of commencement of business, i.e. 15.03.1995. We set aside the impugned orders of the learned CIT(A) dated 09.10.2010 and the AO dated 08.12.2008 on thi .....

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son P. Boaz, Accountant Member and Shri Saktijit Day, Judicial Member For The Appellant : Appellant by: Shri P.J. Pardiwalla and Shri Madhur Agarwal For The Respondent : Shri J. Chauhan ORDER Per Jason P. Boaz, A.M. This Cross Objection (CO) is filed by the assessee against the order of the CIT(A)-10, Mumbai dated 05.10.2010 for A.Y. 1995-96. Revenue s appeal in ITA 434/Mum/2011 was dismissed vide order dated 15.02.2006 on account of low tax effect (i.e. since the tax effect in its appeal was be .....

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/2011 on 11.10.2012. As per section 253(4) of the Income Tax Act, 1961 (in short 'the Act') the assessee was to have filed its CO within 30 days thereof, but filed the same on 26.08.2013 thereby leading to a delay of 285 days. 2.2.1 In the petition for condonation of delay of 285 days in filing the CO for A.Y. 1995-96, the assessee has put forth the following reasons for the said delay: - 9. ...... The appellants received the Department s appeal (ITA No. 434/Mum/2011) on 11 October 2012. .....

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appellant is entitled to claim the deduction for the expenditure from the date of set up of the business which precedes the date of commencement of business. The appellants had not filed any cross objections against the department s appeal. On realisation of this fact, the appellants wish to file the Cross Objection without any further delay. 12. Your appellants submit that there is no malafide/deliberate intention to delay the filing of cross objection. 13. The appellants submit that this is an .....

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ting up of business which precedes commencement of business as per the directions in the order of the ITAT in ITA No. 5272 to 5274/Mum/2001 dated 18.04.2007. On such realization the assessee filed the CO at the earliest. It is prayed that since the delay being inadvertent, the same be condoned in accordance with the principles laid down, inter alia, by the Hon'ble Apex Court in the case of Collector, Land Acquisition vs. MST Katiji & Others (167 ITR 471) (SC), Ganga Sahai Ram Swarup vs. .....

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rs of condonation of delay in filing appeals has stated that substantial justice should prevail over technical considerations. The Hon'ble Court also explained that everyday s delay must of explained does not mean that a pedantic approach should be taken. The doctrine must be applied in a natural, common sense and pragmatic manner. Considering the aforesaid principles, it is seen from the details submitted in the affidavit that while having a conference with the Sr. Counsel in preparation fo .....

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ly thereafter. Considering the aforesaid principles laid down by the Hon'ble Apex Court (supra) and the facts of the case on hand we find that there has been no malafide or intentional failure on the part of the assessee, who on realization and appropriate advice by the Counsel has proceeded to file the CO. In these circumstances, we are of the considered view that if the delay of 285 days is condoned there will be no loss to Revenue as legitimate taxes payable in accordance with law alone w .....

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tion that since Revenue s appeal in ITA No. 434/Mum/2011 had been dismissed by a Coordinate Bench vide order dated 15.02.2016 the assessee s CO is not maintainable as it did not survive and should be dismissed as infructuous. 3.2 The learned Senior Counsel for the assessee, referring to the provisions of section 253(4) of the Act submitted that a CO is an appeal and even where appeal of the other party is withdrawn or dismissed, CO nevertheless survives and should be adjudicated upon, as provide .....

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and (1979) 118 ITR 766 (Mad.) 3.3.1 We have heard both parties and perused and carefully considered the judicial pronouncements referred to (supra). Section 253(4) of the Act deals with the filing of COs. Rule 22 of the IT(AT) Rules, 1963 also lays down the procedure to be adopted for treatment of COs. The provisions of section 253(4) and Rule 22 are extracted hereunder: - Section 253(4) - The Assessing Officer or the assessee, as the case may be, on receipt of notice that an appeal against the .....

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nst any part of the order of the Assessing Officer (in pursuance of the directions of the Dispute Resolution Panel) or Deputy Commissioner (Appeals) or, as the case may be, the Commissioner (Appeals), and such memorandum shall be disposed of by the Appellate Tribunal as if it were an appeal presented within the time specified in sub-section (3) or sub-section (3A). Rule 22 - A memorandum of cross-objections filed under sub-section (4) of section 253 shall be registered and numbered as an appeal .....

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ourt in the case of CIT vs. Purbanchal Paribahan Gosthi (supra) on the issue of COs referring to section 253 of the Act r.w. Rule 22 of the IT(AT) Rules, 1963 has held that it can be safely held that there is absolutely no difference between an appeal and a CO, save that an appeal can be preferred within 60 days of receipt of the order whereas a CO can be filed within a period of 30 days of the date of service of appeal by the opposite party. Respectfully, following the decision of the Hon'b .....

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nue in respect of the maintainability of the assessee s CO for A.Y. 1995-96. 4.1 In the CO the assessee has raised the following grounds of objections: - 1) The Commissioner of Income-tax (Appeals) -10 (herein after referred to as CIT(A)) ought to have held that the expenses incurred (including depreciation per section 32) of ₹ 10,990,878 be allowed as deduction, as the appellant being a non-resident bank is already engaged in banking business and opening of first branch in India is merely .....

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hould be allowed as a deduction, while computing the total taxable income. The appellants pray that the CIT(A) be directed suitably in the matter. 5) The CIT(A) ought to have held that the business of banking in India was set up on 8 November 1994, being the date of banking licence obtained from Reserve Bank of India. 6) Without prejudice to the above, the CIT(A) ought to have directed the AO to allow deduction for depreciation on fixed assets while computing the total taxable income. 4.2 At the .....

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e income. The assessee claimed that 08.11.1994 was the date of setting up of business. It is contended that even though the Coordinate Bench at para 6 of its order (supra) drew up the distinction between setting up of business and commencement of business, and directed the AO to examine the matter and allow expenditure incurred after the date of setting up of the business, the AO and the learned CIT(A), without examining the matter, held that expenses after the date of commencement, i.e. 15.03.1 .....

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p of the business, which the assessee claims is 08.11.1994, being the date of the letter by which RBI granted it a licence to carry on banking business in India. The authorities below, however, it is seen have held that the assessee would be entitled deduction of expenditure incurred after the date of commencement of business, i.e. 15.03.1995. 4.4.2 In this regard, the Coordinate Bench of this Tribunal in its order in IT Nos. 5272 to 5274/Mum/2001 dated 18.04.2007 in the assessee s case for A.Y. .....

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ile there is a lot of theoretical discussion in the orders of the authorities below as well as in the submissions of the assessee before them and before us also, there is little examination of the facts of the case. There is no doubt that a distinction is required to be drawn between setting up of a business and commencement of business. When a business is ready to perform its task it can be said to be set up. There may be an interregnum or interval between the setting up of the business and the .....

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an opportunity to make its submissions. However, the fact remains that during the course of hearing before the learned CIT(A) as well as before us no material in particular has been relied upon by the assessee so as to establish the date of setting up of business by the assessee in India. The assessee has relied upon only two bare facts as viz, date of grant of licence to do banking business i.e. 08-11-1994; secondly the date of acquisition of building premises that is set to be on 18-07-1994. W .....

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