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TMI Blog2015 (10) TMI 1873X X X X Extracts X X X X X X X X Extracts X X X X ..... rinciple that the respondent assessee company commenced the business operations and allowed the set off the loss so incurred against the income from other sources but he failed to examine the relevancy of the expenditure claimed on the trading account. Therefore, we restore the matter to the file of the Assessing Officer with the direction that if the expenditure claimed is directly relatable to the trading activity, the same may be allowed as a business loss which can be set off against the income from other sources. With these directions, the appeal filed by the Revenue is partly allowed for statistical purposes. - ITA No. 2806/Del/2013 - - - Dated:- 8-7-2015 - G. C. Gupta, VP And Inturi Rama Rao, AM,JJ. For the Appellant : Shri G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed income represents the addition of interest earned of ₹ 33,88,051/- from the banks from deposits made out of surplus funds. The Assessing Officer doubted the veracity of the claim made by the respondent assessee company that it was engaged in the business of trading in the alcoholic beer and hence the expenses claimed to the tune of ₹ 2,72,89,991/- were disallowed and the interest earned of ₹ 33,88,051/- was brought to tax under the head income from other sources. Being aggrieved from this order of assessment, the respondent assessee preferred an appeal before the learned CIT(A)-XV, New Delhi, who vide order dated 20th March, 2013, allowed the appeal vide para 6.2 of the order, which reads as under: 6.2 On careful c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt and the basis for its allocation into true operative expenses and business expenses, I am satisfied with the accounting treatment given by the appellant whereby only such expenses which were directly linked to the collaborative arrangement with DSPL were capitalised and held as pre-operative expenses while the other expenses were held for the business purposes of the appellant, which mainly includes trading of beer. The AO's emphasis on quantitative discrepancy, which was amicably explained by the appellant is not sufficient enough to treat the said trading as sham. In view of this, there was no reason for the AO to treat the entire business expenses as capital in nature. In view of this, since the business loss for the current year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he taxability on the interest income under the head 'income from other sources'. The dispute is only with regard to the setting up off business losses against the income under the head 'income from other sources'. The Assessing Officer had not determined the business losses by holding that the respondent assessee company had not commenced his business operations and he doubted the trading activities carried on by the assessee company on the ground that the trading activity allegedly had been carried as a sham since the sales were made prior to the purchase of beer. From the order of learned CIT(A), it is clear that though he accepted in principle that the respondent assessee company commenced the business operations and allo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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