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TMI Blog2016 (6) TMI 597X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 passed by the Income Tax Appellate Tribunal, Ahmedabad Bench 'B' in ITA No.349/A/2001 & group raising the following substantial questions of law: "(1) Whether, in the facts and circumstances of the case, the ITAT was right in law in holding that even in case of an assessee, whose main object is to construct dam, canal, etc., the business commences only when the entire project for construction of dam, canal, etc. is complete, and not when the first brick was put up at the construction site? (2) Whether, in the facts and circumstances of the case, the ITAT was right in law in holding that the appellant has not set up its business? (3) Whether, in the facts and circumstances of the case, the ITAT was right in law in not allowing interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessment Years mentioned herein above. Therefore, proceedings under the Income Tax Act were initiated. The Assessing Officer did not accept the case of the assessee. Ultimately, appeals were preferred before the Income Tax Appellate Tribunal, which also refused to accept the say of the assessee. Hence, these appeals. 6. We have heard learned Senior Advocate Mr. S.N. Soparkar for the assessee and learned advocate Mr. Sudhir Mehta for the Revenue. 7. Learned Senior Advocate Mr. Soparkar submitted that the expenses claimed by the assessee are revenue in nature and are required to be allowed as deduction while computing "income from business". It was submitted that the stand adopted by Revenue that business can be said to have commence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said that such objects could be achieved without contemplating different stages of completion. It would be wholly wrong to uphold the contention of the revenue that only on completion of work of entire canal, the assessee' business can be said to have set up. In a project like Sardar Sarovar, there are bound to be different stages where different activities take place and those activities being integral parts of the business and when they are set up phase vice, assessee cannot be deprived of benefits of fiscal legislation in disregard to well settled principles on the issue by adopting over technical approach. For determining as to when the business can be said to have been set up, the flow of the water from Narmada Canal in the give ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . No question of law much less any substantial question of law arises. Resultantly, Tax Appeal is dismissed." 8. Mr. Sudhir Mehta, learned counsel appearing for the Revenue, submitted that the business had neither commenced nor it had been set up, as the Project undertaken by the assessee was not only for the construction of canal but, also to operate and earn income by supplying water and generating electricity. It was submitted that the assessee was not doing the construction work for somebody else but, was constructing it for itself in order to earn income and therefore, unless it is ready to give result or the income, it cannot be said to have commenced or set up the business. Hence, the Assessing Officer was justified in holding that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of the assessee. In our opinion, the activities mentioned in the object clause of Memorandum of Association do not contemplate a single activity. 10. What is to be regarded is as to whether the business of the assessee has been set up or not so that the assessee could avail benefits under the Act. Broadly speaking, the activity of the assessee could be divided into three categories ( i) Construction of Dam and related works (ii) HydroPower Plant and (iii) Narmada Main Canal. Considering the different categories of work, it can not be said that such objects could be achieved without contemplating different stages of completion. 11. It would be wrong to uphold the contention of Revenue that only on completion of work of entire Canal, t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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