TMI Blog2023 (6) TMI 732X X X X Extracts X X X X X X X X Extracts X X X X ..... - Dated:- 14-6-2023 - Sh. N.K.Billaiya, Accountant Member And Sh.Anubhav Sharma, Judicial Member For the Appellant : Sh. Manuj Sabharwal, Sh. Shalini, Adv. Ms. Chandandeep kaur, CA For the Respondent : Sh. Bhopal Singh, Sr. DR ORDER PER ANUBHAV SHARMA, JM : The appeal has been preferred by the Assessee against the order dated 28/02/2018 of CIT(A)-1, Noida (hereinafter referred as Ld. First Appellate Authority or in short Ld. FAA ) in appeal No. 171/E-file/2016-17/Noida arising out of an appeal before it against the order dated 28.03.2016 passed u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred as the Act ) by the DCIT, Circle-1, Noida (hereinafter referred as the Ld. AO). 2. The facts in brief are that the appellant was incorporated on 17.07.2012 in India as a subsidiary of Honda Access Corporation, Japan ( Holding Company or HAC ). The appellant is engaged in the business of manufacturing, trading etc. of automobile accessories, auto parts and fittings of all kinds. The return of income was filed at loss of Rs. 1,18,79,282/-. The case was selected for scrutiny under CASS and Ld. AO observed that as company has made additions in fixed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... summon such information from the parties concerned. 12. It is trite that he so sets up the premise has to prove it. An appellate authority can only verify the correctness or otherwise of the evidence led before that authority and not go on collecting the evidence on behalf of the appellant. Since the appellant was making a claim that the findings of the Ld. AO that the appellant has not commenced its business during the previous year relevant for AY 2013-14 was incorrect it is incumbent upon the appellant to prove that correctness of its claim against the revenue and the appellant has to do the same on its own and not through the instrumentalities of this office. 12. As the appellant could not lead any independent third party evidence to corroborate its claim that it has commenced its business during the previous year relevant for AY 2013- 14 and the books of accounts being relied upon were only self-same evidence, the claim of the appellant that its business has commenced as claimed is held to be incorrect. 13. As during the year the appellant has gross receipts of Rs. 17,04,184/- being the interest earned on deposits and the exchange rate fluctuations income, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essary demand notice and enforce the demand. 4. The assessee is in appeal raising following grounds :- 1. On the facts and in the circumstances of the case the order passed by the Ld. CIT(A) is perverse as he failed to consider the voluminous and relevant evidence like purchase orders and confirmations by the vendors etc. 2. On the facts and circumstances of the case Ld. CIT(A) erred in law in holding that the assessee had not commenced the business in the relevant previous year. 3. That on the facts and in circumstances of the case Ld. CIT(A) erred in enhancing the assessed income by making further addition of Rs. 12,78,138 as income from other sources u/s 57 of the Act and by disallowing the loss of Rs. 1,06,54,210/-, which was allowed to be carried forward by the Assessing Officer. 4. On the facts and circumstances of the case the Ld. CIT(A) erred in not deleting the following addition :- (a). Addition on account of brokerage and commission of Rs. 3,21,942/- (b). Addition on account of business promotion of Rs. 4,44,300/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons dated 28.09.2017 and other submissions during the appellate proceedings having details about appointment of MD, sharing of e-mail with regard to design and drawings and placing of purchase order however, the same were all left out of consideration by the Ld. CIT(A). It was submitted that setting up of business has not been defined under the Act and that set up of a business connotes of situation where the assessee is in a state of readiness to undertake its business which was very much established in the case of assessee. Ld. Counsel placed reliance on the judgments of Hon ble Delhi High Court in Carefoul WC C India (P.) Ltd.368 ITR 692, CIT vs. Samsung India Electronics Ltd.[2013] 356 ITR 354 (Delhi) and Dhoomketu Builders and Developmen (P) Ltd.216 Taxman 27 for aforesaid contentions . 7. On the other hand, Ld. DR relied the findings of Ld. Tax Authorities below. 8. Appreciating the matter on record, it can be observed that primarily the Ld. AO was pleased to draw conclusion that assessee is in the state of incorporation only because assessee company has not made any investment in the purchase of plant and machinery. The Bench is of considered view that while d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 452 (Delhi) wherein it has been held that a business will commence with the first purchase of stock-in-trade and the date on which the first sale is made is immaterial. Similarly, for manufacturing, several activities in order to bring or produce finished products have to be undertaken, but business commences when the first of such activities is taken. 11.1 At the same time in the case of CIT vs. Saurashtra Cement Chemical Industries Ltd.[1973] 91 ITR 170, Hon ble Gujarat High Court had taken into consideration the argument of Revenue, based on the decision of Hon ble Supreme Court in Commissioner of wealth Tax V. Ramaraju Surgical Cotton Mills Ltd. [1967]63ITR478 , that in the absence of plant and machinery being installed the business cannot be said to be set up had observed as follows :- 8. The argument of the revenue based on these observations was that extraction of limestone by quarrying leased area of land was merely in the nature of preparation for the establishment of the business of the assessee and the business of the assessee could be said to have been set up only in June, 1960, when the installation of the plant and machinery was completed and the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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