9911796707
TMI Blog2014 (3) TMI 933X X X X Extracts X X X X X X X X Extracts X X X X ..... n the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax(A)has erred in deleting the disallowance of Rs.1,26,67,497/- made by the Assessing Officer on account of presetting up expenses." 3. Briefly stated the facts giving rise to this appeal are that the assessee company is engaged in the business of providing market support and warranty support services and in research and development activities for broadband and broadcast related equipments and production systems. The assessee also intended to manufacture or alternatively sub-contract the manufacture of set top boxes in India and to carry on wholesale trading of set top boxes. Such services were provided by the assessee to its group companies. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st set top box comes under its possession for sale. Section 28 applies only respect of business carried on during the previous year. As a consequence, the expenditure incurred before the setting up a business would not be deductible while computing income of the previous year. This view has been upheld by the Hon'ble Supreme Court in the case of L.M. Chhabda & Sons Vs CIT reported in 65 ITR 638. Further, if the assessee carries on two businesses: A & B, expenditure of business A is not deductible from profit and business B, if business A was not carried on during the previous year. This view has been given in the book TAXMANN's direct taxes law & practice PROFESSIONAL EDITION AY 2008-09 & 2009-10. 3.6 Therefore, expenses to the tun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... systems and modulators. c) Broadband related equipment such as set top boxes and communication related equipments and all other electrical and electronic appliances and apparatus of every description and stores of all kinds" The appellant had hired personnel in the year FY 2004-05 to negotiate on behalf of the company, carry out marketing activities and secure business for the company. The appellant had taken premises 66 lease and paid rent for utilization of office space to carry out its activities in the FY 2004-05. The appellant incurred expenses on travel of its executives for attending various meetings for business promotion, training, seminars etc right from the FY 2004-05. The appellant had incurred expenses on marketing activit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e income of the assessee for the previous year. The Assessing Officer further held that if the assessee carries on two businesses i.e. a) and b), the expenditure of business 'a' is not deductible from profit of business 'b' if business 'a' was not carried on during the previous year. When the matter was heard before the first appellate authority i.e. before the Commissioner of Income Tax(A), it was contended on behalf of the assessee that the set top box business is a part of existing business of the assessee providing services, such as market support, Research & Development and warranty support services for its group enterprises in India. It was also contended on behalf of the assessee that the common management, common business organizati ..... X X X X Extracts X X X X X X X X Extracts X X X X
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