2014 (1) TMI 949

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..... construction of roads. Earning of income from advertisement placed on such barricades, might have been incidental, but nevertheless, without such barricades, the income could not have been earned - If the advertisement income is to be considered under the head "income from other sources", then necessarily cost of barricades had to be considered as expenditure wholly and exclusively incurred for the purpose of making such income - If, on the other hand, the cost of barricades were to be considered as preliminary and pre-operative expenditure, revenue earned on advertisement would only go to reduce such expenditure - the assessee was entitled for claiming the barricade expenditure as expenses against income on advertisement – Decided in f .....

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..... sements were placed thereon. Therefore, as per the assessee, the barricades were necessary expenditure incurred for earning the advertisement income which had to be allowed to be set off. However, the Assessing Officer was not impressed. According to him, barricades erected were only to control vehicular traffic and assessee's business was not to earn revenue from advertisement income. As per the Assessing Officer, such advertisement income was only incidental. Just because these were temporary structures, it could not be considered as revenue outgo. Assessing Officer also noted that assessee had not commenced any commercial activity, since toll collections were yet to begin. Expenses incurred for barricades, according to A.O., were in the .....

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..... fficer had considered the income from advertisement placed on the barricades, under the head "income from other sources". As against this, assessee's claim is that expenditure incurred on barricades should not be considered as a part of pre-operative expenditure, but had to be allowed for set-off against advertisement revenue. In our opinion, if the cost of barricades and maintenance are to be considered as a part of pre-operative expenditure, then the income arising out of advertisement placed on such barricades, would only go to reduce the pre-operative expenditure. It is not akin to interest on fixed deposits. Interest earned on deposit, is considered under the head "Income from other sources" when surplus funds are kept in bank. On the .....

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