Subscription   Feedback   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Articles Highlights TMI Notes SMS News Newsletters Calendar Imp. Links Database Experts Contact us More....
Extracts
Home List
← Previous Next →

ACIT, Circle-3 (2) , New Delhi Versus ASF Insignia SEZ Pvt. Ltd. (Earlier known as Canton Buildwell Pvt. Ltd.) And Vice-Versa

2017 (9) TMI 1222 - ITAT DELHI

Disallowances of business expenses - business has actually not commenced - CIT-A allowed claim - Held that:- In the earlier year already finding has been given that business of the assessee has been set up, then consequently in this year it cannot be held that no business has been set up. Thus, the order of the Learned CIT (Appeals) as incorporated above is not only based on correct appreciation of facts but is also in consonance with earlier year’s precedence and therefore, the order of the Lea .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of even date 10.09.2014, passed by the Ld. CIT (Appeals) -V, New Delhi for the quantum of assessment passed u/s 143(3) for the A.Ys. 2010-11 and 2011-12. 2. Since issues involved in both the years are common arising out of identical set of facts, therefore, they were heard together and are being disposed of by way of this consolidated order. 3. We will take the appeal for the A.Y. 2010-11, wherein the sole issue raised by the revenue reads as under:- 1. On the facts and in the circumstances of t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s engaged in construction of IT SEZ at Gwal Pahari, Faridabad Road, Gurgaon. The company was incorporated in 6.9.2005 and filed its return of income for the first time in the A.Y. 2006-07. During the year consideration assessee had declared loss of ₹ 76,18,772/-. The Assessing Officer noted that the assessee company has shown loss from its business at ₹ 1,81,35,938/-, as against, it has claimed expenses amounting to ₹ 1,89,63,082/-. The Assessing Officer following the earlier y .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

owards capital-in-progress. The expenses claimed were normal business expenditure incurred for the business and corporate set-up. However the Assessing Officer had made the disallowance on the ground that no business activity had been carried out. 5. Before the Learned CIT (Appeals) detailed submissions were made both on factual points and on legal points relying upon various judgments especially in the case of CIT vs. Hughes Escorts Communications Ltd. 311 ITR 253 (Del), wherein the jurisdictio .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ellant company was incorporated on 6.9.2005 and its first accounting year ended on 31.3.2006, for which a return of income was filed for A.Y.2006-07. Referring to the finding of the AO that the business of the assessee has not commenced since the SEZ project is not ready for sale, the appellant has argued that during AY 2009-10, the company had made appointment of its staff which includes Sr. Vice-President-Commercial. That it had obtained approval of operation of SEZ from the Min. of Commerce, .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

that commencement of business cannot be said unless SEZ project is ready for sale and that since there is no business income and therefore no expenditure is incurred, is also legally incorrect. In support of this proposition the appellant has relied on several decisions of the Hon ble Court including that of CIT vs. Saurashtra Cement(Supra); CIT vs ESPN Software(Supra); CIT vs. Hughes Escorts Communication Ltd. (Supra). I have carefully gone through the submission of the appellant and considerin .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

t step in the course of various business activities is undertaken the business is deemed to have been set up. From the ratio of the cases relied upon by the appellant as also the following decisions, which are as under:- (i) CIT vs L.G.Electronics (I) Ltd. 282ITR 545 (DEL). (ii) Western India Vegetable Products Ltd Vs CIT 26ITR 151 (Bom), (Hi) CIT w Sarabhai Management Corvoration Ltd (1991) 192 ITR 151 (SC), (iv) Hushes Excess Communication Ltd. 213 CTR 45 (Delhi) it is seen that the Hon ble Co .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

. Act. In this connection, it is also observed that in the preceding Assessment Year 2009-10 too similar disallowance had been made by the AO which has since been allowed by the ld.CIT(A)-VI, New Delhi vide the appellate order dated 5.11.2012. I have gone through the finding of the Id. CIT(A) on the issue and am in agreement with the same. Consequently, in view of the above discussion the expenses for ₹ 1,89,69,082/- is directed to be deleted and the appeal is allowed. 6. It has been admit .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ng and holding as under:- 6.2. Be it as it may, in the case on hand, the expenses incurred, which have been disallowed by the AO, are in the nature of revenue expenses i.e. business promotion, office maintenance, travelling, salaries etc. The AO was of the view that the assessee has not brought any evidence that it has been carrying on systematic and continuous business activity. The assessee on the other hand submits that it has purchased land, commenced development and has also obtained the re .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ith the construction activity have been claimed as revenue expenses by the assessee. In our view the assessee has set up its business and the expenditure on revenue account has to be allowed and was rightly allowed by the first appellate authority. It is well settled that expenditure has to be allowed on setting up of the business and they might be a gap between the date on which the business is set up and the date of commencement of the business. The contention of the assessee also finds suppor .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ntered into a commercial agreement with Tata Consultancy Services for leasing out the SEZ which is the business of the appellant company. Thus the facts of this case are different than the case law relied upon by the Assessing Officer of Akzo Nobel Car Refinishes India Private Limited (Supra)" 6.4. Thereafter he relied on the decision of Delhi High Court in the case of CIT vs. Hughes Escorts Communication Ltd. 311 ITR 253 and the judgment of the Hon'ble High Court in the case of CIT vs. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

what is new what is new
  ↓     bird's eye view     ↓  


|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version