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TMI Blog2012 (10) TMI 49X X X X Extracts X X X X X X X X Extracts X X X X ..... ormal rate. We are however unable to accept the arguments that merely because the building was ready, the business had been set up. The assessee was setting up entertainment centre and, therefore, unless assessee was ready to provide any of the entertainment services, it cannot be said that place of business had been set up and the building was used for the purpose of business. It has not been examined whether these fitness machines were ready for use before 30.9.2003. No specific opportunity had been given to the assessee to prove whether any of the services in the entertainment centre were were ready before 30.9.2003. Case remand back to AO - ITA No. 4428/Mum/2010 - - - Dated:- 13-7-2012 - SHRI MANMOHAN AND SHRI RAJENDRA SINGH, JJ. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It was argued that entertainment center was ready by 30.09.2003 although the first bill was raised in January 2004. The assets purchased by the assessee had been used for the purpose of business, and, therefore, depreciation should be allowed at the full rate. 2.1 The AO however, did not accept the contentions raised. It was observed by him that the assessee had acquired the premises vide agreement dated 2.09.2003 and made payment for architecture fee and for purchase of plywood. The assessee had also purchased some fitness products along with AC in the first half of the year but all other assets such as video games, gymnasium equipments, music system, telephone equipment, transformer, UPS System, stabilizers, water plant, electrical fitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accordingly urged that full depreciation should be allowed. CIT(A) however did not accept the explanation given. It was observed by him that the building had been purchased only on 2.9.2003 and, thereafter, it had to be furnished and machinery had to be installed. The first bill was raised only on 1.1.2004. The CIT(A) also observed that the assessee had not placed any material on record except purchase bills for the machinery and equipments to show that it had been installed, tested and ready for use prior to 30.9.2003. Accordingly, he confirmed the disallowance made by AO aggrieved, by which the assessee is in appeal before the Tribunal. 4. Before us, the ld. AR for the assessee submitted that entertainment center was ready for use bef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0.9.2003 as several machinery and equipments were installed after 30.9.2003. It was also pointed out by him that judgment of Hon'ble High Court of Punjab Haryana in the case of CIT Vs. O.P. Khanna Sons (supra), was not applicable to the case of the assessee as in that case business had already been set up and it was only the case of shifting of the business to the new building. It was argued that the depreciation had been rightly allowed @ 50%. 5. We have perused the records and considered the rival contentions carefully. The dispute is regarding computation of depreciation in respect of entertainment centre set up by the assessee during the year at Pune. The assessee had made total investment of Rs.6,00,42,980/- in the entertainment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... centre was set up and was ready for use prior to 30.9.2003. The ld. AR for the assessee has argued that the assessee had been making payment for acquisition of premises since 11.11.2002 and possession of the building had been taken in April, 2003 and premises had been registered on 2.9.2003 after making full payments. Therefore, it was not correct to say that building had been acquired only on 2.9.2003. After taking possession of the building in April, 2003, the assessee had got the interior work and flooring etc. done and also installed ACs and other equipments. Therefore, the building was fully ready prior to 30.9.2003 and depreciation should be allowed at normal rate. We are however unable to accept the arguments that merely because th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aised by the assessee which as pointed out earlier is not relevant as it is not the actual commencement of business but the setting up of the business which is relevant and business has to be taken as set up once the assessee is in a position to provide the services of entertainment centre. In case, there are several services in the entertainment centre, business can be considered as having been set up in case the assessee is in a position to offer any of such services. The assessee in this case in the letter dated 17.11.2008 addressed to CIT(A) had given details of various payments made for the property as well as equipments prior to 30.9.2003 which also includes payment of Rs.5.00 lacs for fitness machine on 1.9.2003 and Rs.2.50 lacs for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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