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TMI Blog1954 (3) TMI 59X X X X Extracts X X X X X X X X Extracts X X X X ..... legal charges for the purchase of the mill being a capital nature .... Rs. 3,054 Expense incurred before the date of getting the certificate of commencement of business .... Rs. 3,454 Expenses incurred after the above date, but before actual starting of the business less expanses already disallowed above and included in such expenses (details are given in the Appellate Assistant Commissioner's order)... Rs. 24,269 the Income-tax Officer held that the assessee company started business when it purchased the oil mill from Hasham Premji Co. on 1st November, 1946. In other words, the " previous year " of the assessee company commenced from 1st November, 1946, and ended on 31st March, 1947. 3. The assessee company went up in appeal to the Appellate Assistant Commissioner. The Appellate Assistant Commissioner held : " As already stated by me the books clearly indicate that purchases of groundnut were made even September, 1946. All expenses claimed are ordinary day-to-day running expenses which are necessary for carrying on of the business. The Certificate of commencement of the business was admittedly obtained by the company on 20th April, 1946. In these circumstances it is too farfet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nted before their Lordships. The order of the Tribunal referred to hereinabove clearly shows that the Tribunal has not relied only upon the date of the purchase of raw material for the purpose of fixing the date when the assessee company commences it business. There were many other facts taken into account in fixing the date of the commencement of the business like certificate of commencement of business, the date of the purchase of the mills, the details of the expenses (given in the order of the Appellate Assistant Commissioner) and so on. If the assessee company had into purchased of the mills, it is obvious that no business of the oil mill would have been carried on by the assessee company. The Tribunal itself has stated that this is a question which has to be ascertained by taking into account various surrounding circumstances. After taking into account all the relevant facts the Tribunal allowed a further period of about a month or so and fixed the date of the commencement of the business activity as from 1st September, 1946. 1st September, 1946, is not the date of the first purchase. The assessee company's case all through has been that the business commenced the moment it r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The assessee company went in appeal to the Appellate Assistant Commissioner and substantially the view taken by the Appellate Assistant Commissioner was that the expenses incurred after getting the certificate of commencement of the business should be treated as expenses incurred for the purpose of carrying on the business in the year of account, and therefore barring the sum of Rs. 3,616 in respect of which the assessee had not appealed, the Appellate assistant Commissioner allowed the balance of Rs. 24,269. The department appealed to the Tribunal and the Tribunal took the view that the first purchase of raw material for the purposes of being crushed in the mill which was to be erected was made at the end of September, 1946. They also took the view that some time must have been taken in making arrangements for the purchases and therefore the material date they fixed was the 1st of September, 1946, and they disallowed the expenses previous to the 1st of September, 1946, and allowed expenses subsequent to that date. Therefore it is to be noticed that the three Income-tax authorities had fixed three different dates as the relevant dates. The Income-tax Officer fixed the date as the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this : "Business can only be said to have commenced when some activity in relation to carrying on the business is done. It may be the purchase of raw material, placing an order for raw material, sales and so on." Therefore they are giving illustrations of what a business activity may be. When we asked them to submit a statement of the case they have amplified and elaborated this statement which appeared in para. 1 of the statement and have elaborated the statement. They have told us that they have taken into consideration the details of the expenses given in the order of the Appellate Assistant Commissioner. Now, we are not prepared to reject the statement of a responsible body like the Income-tax Tribunal when it informs us that in arriving at its decision the details of the expenses were taken into consideration. Therefore the question that we have ultimately to answer and which is the real question that arises on the order of the Tribunal is : "whether there was evidence before the Tribunal for holding that the assessee company commenced its business as from the 1st of September, 1946 ?" Now, it is rather unfortunate that in the order of the Tribunal and also in the quest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and every English expression must mean something different, however slight the difference, from any other expression. English language is full of nuances and if possible we must give a different meaning to the expression "setting up" from the expression "commenced", Mr. Joshi very strongly relied on a judgment of Mr. Justice Rowlatt reported in Birmingham and District Cattle By-products Co. Ltd. v. Commissioners of Inland revenue (1919) 12 Tax Cas. 92. In that case the assessee company was incorporated on the 20th of June, 1913, and between that date and the 6th of October, 1913, the directors arranged for the erection of works and the purchase of plant and machinery, and entered into agreements relating to the purchase of products to be used in the business and to the sale of finished products. On the 6th of October, 1913, the installation of plant and machinery being completed, the company commenced to receive raw materials for the purpose of manufacture into finished products. For the purpose of excess profits tax a question arose as to the computation of average amount of capital employed by the company during the accounting period and the company contended that it commenced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red after the setting up of the business and before the commencement of the business, all expenses during the interregnum, would be permissible deductions under Section 10(2). Now, applying that test to the facts here, the company actually commenced business only on the 1st of November, 1946, when it purchased a ground-nut oil mill and was in a position to crush ground-nuts and produce oil. But prior to this there was a period when the business could be said to have been set up and the company was ready to commence business, and in the view of the Tribunal one of the main factors was the purchase of raw materials from which an inference could be drawn that the company had set up its business; but that is not the only factor that the Tribunal has taken into consideration. The Tribunal has, as pointed out in the statement of the case, scrutinised the various details of the expenses given in the order of the Appellate Assistant Commissioner and having scrutinised those expenses the Tribunal has come to the conclusion even on an interpretation more favourable to the assessee than the one we are giving to the expression "setting up" that these expenses do not show that the business was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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