TMI Blog2009 (8) TMI 28X X X X Extracts X X X X X X X X Extracts X X X X ..... d the addition – Held that - The facts of the present case are however more in line with the decision of this Court in the case of Hughes Escorts Communications Ltd [2009 -TMI - 33670 - DELHI HIGH COURT] – Expenses allowed to be deducted. - 1073/2008 - - - Dated:- 19-8-2009 - A. K. SIKRI and VALMIKI J. MEHTA, JJ. Ms. Sonia Mathur, Advocate, for the appellant. Mr. Ajay Vohra, Ms. Kavita Jha Mr. Sriram Krishna, Advocates, for the respondent. JUDGMENT VALMIKI J. MEHTA, J. - This appeal is against the order of the Income Tax Appellate Tribunal (hereinafter referred to as "ITAT") dated 2.11.2007 whereby the ITAT has deleted the disallowance of expenses prior to 1.02.1996 made by the Assessing Officer and which was confirmed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e approval of the Reserve Bank of India for receiving foreign exchange loan against future issue of equity. During the period from November 1995 to January 1996, the assessee-company paid salary to the staff and employees through two companies, wiz., Kelvinator of India Ltd. and Expo Machinery Ltd. The employees incurred petty expenditure on behalf of the company through imprest amounts sent to them through Kelvinator of India Ltd. A Bank account was opened on 1.2.1996 in the name of the company and thereafter the expenses were incurred from the same. 3. For the year ended 31.3.1996 the assessee-company filed its return of income declaring a taxable income of Rs. 94,41,990/-. While examining the return the Assessing Officer noted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te of setting up has to be allowed as a deduction. It was further held that the question as to when the business is set up depends on the facts of each case and the nature of the business and no hard and fast rule can be laid down as to when the business was set up. 6. In view of the above, the following paragraph of the judgment of the ITAT which exhaustively details the facts and the reasons as to why the business is set up not on 1.2.1996 as contended by the Assessing Officer but on 1.11.1995 is reproduced below and with which we concur: "4. It may thus be seen that the question when a business may be said to have been set up is dependent on the facts of each case and largely on the nature of the business proposed to be undertake ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d of Noida on 04.09.1995 and the required end-user certificate was also issued. The total cost of the purchase was Rs.29.84 lakhs (pages 21-23 of the paper book). Branch managers at Bhopal, Bhubaneswar and Pune were appointed in October 1995 (pages 37-42 of the paper book). Regional managers at Bombay, Calcutta and Gauhati were appointed during the same time (pages 43 to 48 of the paper book). Page 2 of the assessment order shows that the salaries were paid from November 1995 including allowances, bonus, gratuity and contribution to provident and other funds. The amount of such payments have also been given therein and are not reproduced here for the sake of brevity. The office rent of Rs.17500 for November and Rs.25000 each for December 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cal Cotton Mills Ltd. to canvass the proposition that it is only when actual business operation was commenced, a business is set up. We feel that the decision of the Supreme Court in Ramaraju Surgical Cotton Mills Ltd. is not applicable to the facts of the present case because the said judgment was dealing with the provision of Section 5(1)(xxi) of the Wealth Tax Act, 1957 along with its proviso and the language of the main section and the proviso were wholly different. In the proviso, the requirement was specifically of the company commencing operations but in the main section the expression used was different viz. of setting up of the unit. In the light of the relevant provisions, the facts of that case and the claim of the assessee to ge ..... X X X X Extracts X X X X X X X X Extracts X X X X
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