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TMI Blog2015 (12) TMI 617X X X X Extracts X X X X X X X X Extracts X X X X ..... said to be in a position to cater to its customers, then it can be said that business is set up and it would amount to carrying on the business and accordingly the expenses would stand allowable to the assessee, irrespective of the fact whether actually assessee got any customer and earned any business income during the year or not. Thus, the disallowance made by the AO is contrary to law and facts and the same is deleted and the AO is directed to allow the expenses claimed by the assessee - Decided in favour of assessee. - ITA no.7274/Mum/2011 - - - Dated:- 28-8-2015 - SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI ASHWANI TANEJA, ACCOUNTANT MEMBER For The Appellant : Shri Satish Mody (AR) For The Revenue : Shri Vijay Kumar Son ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these expenses on the ground that there was no business income received by the assessee during the year. The assessee contested this issue before the Ld. CIT(A), wherein the Ld. CIT(A) confirmed the disallowance on the ground that no business was carried out during the year. Before us, the Ld. Counsel appearing on the behalf of the assessee submitted that routine business expenses incurred during the normal course have been wrongly disallowed by the authorities below and requested for reversing the action of AO and Ld. CIT(A). On the other hand, the Ld. DR relied upon the orders of Ld. CIT(A) and the AO. 5. We have carefully considered arguments made by both the sides. It is noted from the facts on record that the assessee had purchased ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not earn any business income during the year, but if the business is set up, it would amount to carrying on the business under the income tax law and therefore, the business expenses would stand allowable. 6. In following cases it has been held that whether income has been earned or not and whether ultimate benefit has accrued immediately or not, the expenses incurred shall be allowable if these have been incurred for the purpose of business or for commercial expediency:- 1. Eastern Investments Ltd. Vs. CIT (20 ITR 1) (SC) 2. J.R. Patel Sons Pvt. Ltd. 69 ITR 782 (Guj) 3. Raipur Mfg. Co. Ltd. (84 ITR 508,516) (Guj) 4. Security Printers of India Pvt. Ltd. (78 ITR 766,774) (All) 5. Tatasons Ltd. (18 ITR 460,467) (Bom) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh Court in CIT Vs. ESPN Software India (P) Ltd. 301 ITR 368 that the date of setting up of business and date of commencement of business are distinct and the expenses incurred after the setting up of the business are deductible as Revenue expenditure. 7. In the case before us, it may be seen that the assessee has already purchased residential flat for the purpose of resale/lease, and therefore assessee was apparently ready to do its business. Under these circumstances, it can be said that the business is set up by the assessee during the year under consideration. For the deductibility of expenses incurred after this stage, earning of the business income is not a mandatory condition under the law. The assessee may not have been succes ..... X X X X Extracts X X X X X X X X Extracts X X X X
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