TMI Blog2019 (12) TMI 77X X X X Extracts X X X X X X X X Extracts X X X X ..... ufacture and the trade of a fertilisers and urea and at the same time doing the business of finance activity. Be that as it may, as rightly argued by the assessee before the Ld. CIT(A) as well as before us that a company engaged in financial activity can invest its fund in any type of company to earn interest whereas it is not so in the case of the assessee. In case of assessee it is clearly stipulated that the investment is strictly confined in other companies having similar object including that of manufacturers, fabricators so on and so forth. It is not the case of the Revenue that the business of Duncan industries Ltd does not fit in the description given in the Main objects to be pursued by the company on its incorporation in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red into an arrangement on renovation and up-gradations of existing assets of a fertiliser unit of Duncan Industries Ltd. to Kanpur Fertiliser and Cements Ltd. for the same funds in the form of investment in shares capital were given to Jaypee Uttar Bharat Ltd. In the circumstances, it cannot be said that the Duncan Industries Ltd had not started the work till the end of the year. It was a sick industry for the revival of which the BIFR approved the scheme proposed by the assessee. We find it difficult to agree with the authorities below that the assessee did not set up business in the relevant assessment year and, therefore, the income earned by the assessee on the investment has to be treated as income from other sources. Direct the As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that in view of the decision of the Hon ble Apex Court in the case of Tuticorin Alkali Chemicals and Fertilisers Limited vs. CIT (1997) 141 CTR SC 387, the interest derived by the assessee from the investments in the similar business, before the commencement of the business, should be treated to have been earned from other sources. Expenses were also disallowed holding that the expenditure was in respect of preference shares of the assessee company and therefore it is capital in nature. 4. Assessee is, therefore, before us in this appeal submitting that the assessee had commenced its business by making use the strategic investments in companies in furtherance of its main object of carrying on the business of manufacture of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business. 6. We have gone through the record in the light of the submissions made on either side. Assessee had produced the copy of the Memorandum and Articles of Association and also the certificate of incorporation issued on 3/6/2010. The Memorandum of Association of the assessee, vide MAIN OBJECTS TO BE PURSUED BY THE COMPANY ON ITS INCORPORATION clearly read that to carry on the business, directly or by making investment in other companies having similar objects, including that of manufacturers, fabricators, processors, producers, growers, importers, exporters, years, sellers, distributors, dealers, agents, merchants and concessionaries, refiners and preparers of all classes and kinds of fertilisers and urea and all c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of the Revenue revolves around the observations of the Assessing Officer that the finance activity of making investment in similar business does not fit in the business of the assessee of manufacture and trade of fertilisers and urea. We are at a loss to understand wherefrom this information is gathered by the learned Assessing Officer. The Revenue cannot prevent the assessee from pursuing the businesses of the choices as incorporated in the Memorandum and Articles of Association. There cannot be anystipulationthat the assessee cannot do business both in manufacture and the trade of a fertilisers and urea and at the same time doing the business of finance activity. 9. Be that as it may, as rightly argued by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on ble Jurisdictional High Court, held that merely because actual sales and purchase of products did not happen during the subject financial year, which is not a necessary condition/activity in order to hold a business was set up, it cannot be said that business was not setup. It is further held that, - For commencement of a business, there must be in place some income generating asset or income earning structure. In several cases, there is a gap or an interval between setting up and commencement. When the business is set up, is a mixed question of law and fact and depends upon the line, nature and character of the business/professional activity. For example, for manufacturing business, purchase of new material or electrici ..... X X X X Extracts X X X X X X X X Extracts X X X X
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