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2018 (3) TMI 534

llant had purchased two vehicles and also taken office on hire - Held that:- In the present facts, the purchase of two cars was preparatory to setting up of business. However, in the absence of necessary permission for operating license as required from the Regulatory Authorities, was not produced before the Authorities and the absence of various other requirement to conclude has been set up was found on facts by all the Authorities under the Act, to be lacking. - Finding of fact arrived at by the Authorities under the Act, cannot be said to be perverse. No substantial question of law. - Income Tax Appeal No. 1149 of 2015 - Dated:- 5-3-2018 - M.S. SANKLECHA & SANDEEP K. SHINDE,JJ. Mr. K. Gopal with Mr. Tanmay Phadke, for the Appella .....

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Thus, Assessing Officer disallowed business loss declared by the Respondent-Assessee on the ground that no business had been set up in the previous year relevant to the subject Assessment Year. 5. In appeal, the Commissioner of Income Tax (Appeals) [CIT(A)] by an order dated 17th April, 2014 dismissed the Assessee's appeal. 6. On further appeal, the Tribunal by the impugned order, on examination of the facts notes as under: "5.2: Coming to the facts of the case, the company claims to have appointed MD as well as Chief Operations Manager, putting the infrastructure in place by acquiring office premises, staff furniture and fittings etc. No grant of any operational lease by the year end should not, therefore, be of any consequence. .....

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ve the operating licenses/ permits, as required from the regulatory authorities, been obtained? Whether, the firm arrangements for capital - both owned as well as borrowed (by way of lines of credit) for either operational leases or fleet management (which is its other principal business), both being highly capital incentive, been formalized? Has the company entered into a relationship with any vehicle supplier inasmuch as, as distinct from a financial lease, the risk and reward of the ownership in case of an operating lease tests with the lessor, so that the terms of the lease could not be agreed upon (with the customers) unless it has a complete understanding of the product, the risks associated with the ownership and management thereof, .....

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ased two vehicles and also taken office on hire. In support, he has relied upon the decision of the Apex Court in CIT v/s. Sarabhai Management Corporation 192 ITR 151. 8. Our Court in Western India Vegetable Products Ltd., v/s. CIT 26 ITR 151 has observed that the unit cannot be said to have been set up unless it is ready to discharge its functions for which it has been set up. It is only when the unit has been put into such a shape that it can start functioning be it trading or a manufacturing operations that it can be said that the unit has been set up. This is to be determined on the basis of the facts found. In this case, all the authorities under the Act have found on facts that the Appellant's business had not been set up inasmuch .....

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