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2020 (10) TMI 561 - ITAT BANGALOREDisallowance of business expenditure - assessee has not commenced its business operations - expenses incurred after setting up of business - HELD THAT:- The settled principle is that the expenses incurred after setting up of business and when it is ready for actual commencement of business, is allowable as deduction. The assessee is engaged in the business of real estate development, i.e., it is engaged in the business of acquiring land and developing the same into residential/commercial properties. The question as to when the business can be set up in this kind of business was examined by the co-ordinate bench in the case of Valmark Developers P Ltd [2018 (4) TMI 1565 - ITAT BANGALORE] and held that the acquisition of lands for purposes of real estate development would amount to setting up and commencement of business and the expenses claimed by the appellant are allowable. Also see M/S DHOOMKETU BUILDERS & DEVELOPMENT PVT. LTD. [2013 (4) TMI 668 - DELHI HIGH COURT] In the instant case, there is no dispute with regard to the fact that the assessee has started acquiring lands in 2007 itself. Accordingly, we set aside the view expressed by Ld CIT(A) on this point and direct the AO to hold that the assessee has set up its business. all the expenses related to the project should be taken to “Work in Progress”. Remaining expenses should be allowed as deduction. If any common expenses have been incurred, then it may be split into project related item and general item on a rational basis. Since this exercise has to be carried out, we restore this issue to the file of AO. Interest income under the head “income from other sources” - HELD THAT:- In the instant case also, the assessee has failed to demonstrate the business compulsion for making deposits with banks. Accordingly, following the above decision GLOBAL ENTROPOLIS (VIZAG) PVT. LTD. [2019 (9) TMI 37 - ITAT BANGALORE] we hold that the Ld CIT(A) was justified in assessing the interest income under the head Income from other sources in assessment years 2012-13 and 2014-15.
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