TMI Blog2018 (4) TMI 1565X X X X Extracts X X X X X X X X Extracts X X X X ..... hri C.H Sundar Rao, CIT For the Respondent : Shri V Srinivasn, Advocate ORDER PER BENCH : All these appeals are filed by the Revenue against the common order dated 27/9/2017 relating to assessment year 2009-10 to 2014-15. When these appeals were taken up for hearing, it was submitted that the tax effect involved in ITA Nos.2648 to 2652 was less than ₹ 10 lakhs and, therefore, those appeals by the revenue have to be dismissed as not maintainable in view of the CBDT Circular No.21/2015 dated 10/12/2015. 2. The ld DR however submitted that para 5 of the aforesaid Circular which reads as follows:- 5. The Assessing Officer shall calculate the tax effect separately for every assessment year in respect of the disputed issues in the case of every assessee. If, in the case of an assessee, the disputed issues arise in more than one assessment year, appeal, can be filed in respect of such assessment year or years in which the tax effect in respect of the disputed issues exceeds the monetary limit specified in para 3. No appeal shall be filed in respect of assessment year or years in which the tax effect is less than the monetary limit specified in para 3. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon ble High Court finally held that even though the cumulative tax effect in a common order passed by CIT(A) for several years is more than 10 lakhs but if the individual tax effect in each assessment year is less than the monetary limit prescribed in Circular No.3/2011, the same should be held to be not maintainable. He therefore submitted that the tax effect for each AY should be seen separately and in that event the appeals for the other AYs except AY 2013-14, would be not maintainable as the tax effect was admittedly less than ₹ 10 lacs. 5. We have considered the rival submissions and are of the view that the decision of the Hon ble Karnataka High Court is directly on the point and was rendered in identical circumstances. Para 5 of the Circular No.3/2011 considered by the Hon ble Karnataka High Court is in pari materia same as para 5 of Circular No.21/20115. For the sake of ready reference, we give below the relevant paragraphs of Hon ble Karnataka High Court on this issue. .Per contra, Sri K.V. Aravind, learned counsel for the Appellants refers to para 5 of Circular No. 3/2011, which reads thus:- 5. The Assessing Officer shall calculate the tax effect s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t all the assessment orders which is a part of the common order, irrespective of the fact, whether for one of the assessment year/years, the tax effect is less than ₹ 10 lakhs. However, if it is a solitary order and tax effect is less than ₹ 10 lakhs, the assessee is entitled to the benefit of exemption and the revenue cannot file the appeal. 19. The para-5 of the circular is highly discriminatory. After all the bunching and clubbing of cases and passing common orders is a procedure adopted for convenient disposal of the cases by the court or quasi judicial authority. The assessee has no say in the matter of clubbing of cases and passing of common orders. Merely because the authority concerned for judicial convenience, clubs the cases and pass common order, the assessee should not be denied of the benefit of circular-3/2011 when the tax effect for the assessment year/years the tax effect is less than ₹ 10 lakhs. Therefore, it is to be held that whether it is a solitary order or common order, the assessee should have the benefit of the tax effect less than ₹ 10 lakhs and in all such cases whether it is a part of the common order or a solitary order, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rred in the course of a business, meaning there is a business in existence. It was submitted that once a business is found to have been set up as a matter of fact, expenses of revenue nature incurred wholly and exclusively for the purpose of business are allowable. The Assessee pointed out that it had acquired land and thus commenced its activity of business. It was submitted that the Assessee incurred various operating and administrative expenses. These expenses are not connected to project and relates to day to day administrative expenses which is claimed as expenditure. The expenses connected to project have been transferred to work-in-progress account. The Assessee thus submitted that the business of the Assessee had been set up and all expenses debited in the profit and loss account were revenue expenditure and therefore the loss claimed by the Assessee has to be allowed. The Assessee relied on the following decisions as to when a business can be considered as having been set up and when a business is set up, all revenue expenditure have to be allowed as deduction in computing income from business. CIT v.. Dhoomketu Builders and Development Pvt. Ltd. (TS - 190- HC -2013(D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are different. The first is capacity to start its earning capacity whereas the latter is actual commercialization of the business. Normally, a manufacturing business requires turnaround time of less than six months, whereas a real estate business may require more than one accounting year. 11. We find that the case of Dhoom Ketu (Supra) of Hon'ble Delhi High Court is similar to the relevant case in hand. We are of the view that the commencement of real estate business will start with acquisition of land property, by an assessee whose intention is develop it and do real estate. Assessee had spent considerable sum for developing the piece of land. This would clearly show that it had set up the business...... 13. It is clear from the decision of the Hon ble Delhi High Court in the case of Dhoom Ketu (supra) that business of real estate developer can be considered as set up when properties are acquired. In the case of the Assessee, the AO has accepted the fact that the Assessee has acquired properties for the purpose of development. Therefore the business of the Assessee ought to have been considered as having been set up. All revenue expenses have therefore to be allowed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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