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TMI Blog2007 (7) TMI 704X X X X Extracts X X X X X X X X Extracts X X X X ..... s of manufacture of footwear and footwear parts as well as trading of goods. 3. The Assessee claimed some expenditure in the profit and loss account (including depreciation) but the Assessing Officer disallowed it on the ground that the Assessee had not been set up and had not commenced any business activity during the relevant previous year. 4. The Assessee preferred an appeal which was allowed by the Commissioner of Income Tax (Appeals) who held that the Assessee had commenced its business during the relevant previous year and, therefore, the Assessing Officer was directed to allow the expenses, as claimed in the profit and loss account. 5. Against the order passed by the Commissioner, the Revenue preferred an appeal to the Income Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Clearly, the solitary transaction by the Assessee was not as a part of its trading activity but was for the purposes of getting registration from the Sales Tax department. Reliance, therefore, cannot be placed by the Assessee on this transaction to substantiate its claim of having commenced trading activity. 9. In so far as the manufacturing activity is concerned, while it is true that the Assessee was granted a completion certificate by the Municipal Corporation of Delhi in respect of the structure built by it and was also granted an electric connection but the fact remains that it was granted a excise licence only on 31st March, 1998, the last day of the relevant previous year. No labour was employed by the Assessee prior to this date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Wealth Tax Act, but the principles laid down by it would be equally applicable to the present case. 11. Applying the law laid down by the Supreme Court, it would appear that on paper the factory of the Assessee had been "set up" but in actual fact, it would be difficult to accept the proposition that the unit was ready to discharge the function for which it was set up. This is because on the basis of the cumulative facts available on record such as the fact that the excise licence was granted only on 31st March, 1998 and employees were recruited only on 1st April, 1998 there was no way that the Assessee could be said to have been in such a position that on 31st March, 1998, it was ready to commence its business activity. Even ..... X X X X Extracts X X X X X X X X Extracts X X X X
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