2007 (1) TMI 87 - HC - Income Tax

Date of commencement of business -Tribunal rejected the revenue contention and contended that the date of commencement of business claimed by assessee is correct - HC upheld the order of tribunal

Summary

Issues:
Date of commencement of business

Analysis:
The Revenue challenged an order of the Income-tax Appellate Tribunal regarding the date of commencement of business by the assessee for the assessment years 1999-2000 and 2000-01. The Revenue contended that the business started on September 15, 1999, while the assessee claimed it commenced on February 9, 1999, when an agreement was signed with a supplier. The assessee, involved in trading health care and nutritional products, incurring a loss of Rs. 24 lakhs, had placed purchase orders with the supplier in March 1999. The Assessing Officer and the Commissioner of Income-tax (Appeals) held that the business started in September 1999. However, the Tribunal disagreed, noting that transactions based on the February agreement were acted upon, including a purchase order in March 1999. The Tribunal found no basis to conclude that the business started in September 1999, considering the documented correspondence.

The High Court observed that the issue of the commencement of business was a question of fact. The Tribunal's decision was not considered unreasonable or illogical. The High Court found no grounds to challenge the Tribunal's factual findings, leading to the dismissal of the Revenue's appeal. The judgment upheld the Tribunal's determination that the business commenced earlier than September 1999, based on the evidence of transactions following the February agreement. The High Court emphasized the importance of factual assessments in such cases, affirming the Tribunal's decision as reasonable and factual.