9911796707
TMI Blog2014 (12) TMI 64X X X X Extracts X X X X X X X X Extracts X X X X ..... ction would be the second stage of business activity, but this would not undo the commercial and business activities relating to oil exploration – relying upon CIT versus Sponge Iron India Ltd. [1992 (10) TMI 67 - ANDHRA PRADESH High Court] - for commencement of business all activities which go on to make business need not be started simultaneously. As soon as an activity which is an essential activity in the course of carrying on the business is started, the business must be said to have commenced - revenue would be generated once the oil production commenced had capitalised the expenditure on oil exploration cost and the same was reflected as “capital work in progress” in the balance sheet – the assessee had themselves added back the R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was accordingly disallowed and income as returned was enhanced by ₹ 1,69,72,374/-. The Assessing Officer further directed initiation of penalty for concealment under Section 271(1)(c) of the Income Tax Act, 1961 (Act, for short) for the said disallowance. 3. In our opinion, the Commissioner of Income Tax (Appeals) rightly deleted the said disallowance after observing that the business of the assessee had been set up and the expenditure incurred was business expenditure. The Tribunal has affirmed the said finding. 4. The respondent-assessee was incorporated in March, 2004 and since then engaged in the business of oil and gas exploration, etc. In the proceedings for the earlier Assessment Years, i.e. 2005-06 to 2007-08, it has be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssential activity in the course of carrying on the business is started, the business must be said to have commenced, yet the Assessing Officer failed to apply the said ratio. The Gujarat High Court in CIT versus Saurashtra Cement and Chemicals Industries Ltd [1973] 91 ITR 170 (Guj.) held, ... business is nothing more than a continuous course of activities and all the activities which go on to make up the business need not be started simultaneously in order that the business may commence. The business would commence when the activity which is first in point of time and which must necessarily precede the other activities is started. A similar view was taken in Sarabhai Management Corporation Ltd versus CIT [1976] 102 ITR 25 (Guj.), wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Total (A) 34,93,226 Finance charges 6 Bank charges and Guarantee 1,08,13,329 Commission Total (B) 1,08,13,329 Depreciation claimed 7 Depreciation claimed 26,65,819 Total (C) 26,65,819 ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
