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TMI Blog2015 (12) TMI 374X X X X Extracts X X X X X X X X Extracts X X X X ..... deduction only in relation to the expenditure of revenue in nature in the Profit and Loss Account, we find no infirmity in the reasoned order of the ld CIT(A), therefore, we confirm the finding of the ld CIT(A) on this ground and dismiss the said ground of appeal of the revenue - Decided in favour of assessee. - ITA No. 5660/Del/2014 - - - Dated:- 30-9-2015 - Sh. N. K. Saini, AM For The Assessee : Sh. Rohit Garg Smt. Tejasvi Jain, CAs For The Revenue : Sh. Ved Prakash Mishra, Sr. DR ORDER This is an appeal by the department against the order dated 11.07.2014 of ld. CIT(A)-VIII, New Delhi. 2. Following grounds have been raised in this appeal: 1. Whether on the facts and circumstances of the case in law, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the company is at a very nascent stage of its business and by no stretch of imagination, it could be said that the business had commenced. The AO observed that in the relevant previous year 2007-08, the assessee had only carried out exploration work, therefore, the business of the assessee was not set up and the expenditure incurred prior to setting up of a business was not allowable. In view of the above discussion, expenses including depreciation amounting to ₹ 22,35,42,346/- was treated as preoperative expenses and hence disallowed and added back to the total income. 4. Being aggrieved the assessee carried the matter to the ld. CIT(A) who deleted the addition by holding as under: I have considered the submissions made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue Generation on operation of Oil wells. The appellant is only claiming deduction of the routine expenditure necessary for carrying out the business activities. In my view, the assessing officer cannot today turnaround and say that business of the appellant has not been set up more so when the issue relating to setting up of the business as specifically gone into by the assessing officer while passing the assessment order for the assessment year 2006- 07 under section 143(3) of the Act Moreso, my predecessor has decided this issue relating to setting up of business in favour of the appellant in the assessment year 2008-09, whose order has been upheld by the Delhi Bench of Tribunal in ITA No.32241De1/2011 observing as under: 9. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held by Hon'ble Justice P. N. Bhagwati in the case of CIT Vs. Saurashtra Cement and Chemical Industries Ltd. 91 ITR 170 (Gujarat High Court). The said decision of the Hon'ble Gujarat High Court was also affirmed by the Apex Court in the case of CIT Vs. Sarabhai Management Corporation Ltd. (1992) 102 CTR (SC) 164 and the said decision has recently been followed by the Jurisdictional High court in the case of the CIT Vs. Aspentech India (P) Ltd. 187 Taxmann 25 (Delhi). 10. In the instant case we find that one of the essential activity namely license/right to explore the blocks has been granted and exploration of blocks has already been started without which no production can take place. Hence business had commenced at the stage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion cost and the same have been reflected as capital work for progress in the balance-sheet. The assessee has only claimed deduction of the expenses which have been incurred for day to day operation of the business which are eligible for deduction U/S 37(1) of the Act. Since the assessee has claimed deduction only in relation to the expenditure of revenue in nature in the Profit and Loss Account, we find no infirmity in the reasoned order of the ld CIT(A), therefore, we confirm the finding of the ld CIT(A) on this ground and dismiss the said ground of appeal of the revenue. It is also pertinent to note that the issue relating to setting up of business cannot be decided or changed year after year as held by the jurisdictional Delhi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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