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TMI Blog2017 (9) TMI 1222X X X X Extracts X X X X X X X X Extracts X X X X ..... ntum of assessment passed u/s 143(3) for the A.Ys. 2010-11 and 2011-12. 2. Since issues involved in both the years are common arising out of identical set of facts, therefore, they were heard together and are being disposed of by way of this consolidated order. 3. We will take the appeal for the A.Y. 2010-11, wherein the sole issue raised by the revenue reads as under:- "1. On the facts and in the circumstances of the case, the Ld. CIT (A) has erred on facts and in law: a) In deleting addition of Rs. 1,89,69,082/- on account of disallowances of business expenses when business has actually not commenced. b) In allowing b/f business losses and unabsorbed depreciation when business has not commenced. 2. The appellant craves leave ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts and on legal points relying upon various judgments especially in the case of CIT vs. Hughes Escorts Communications Ltd. 311 ITR 253 (Del), wherein the jurisdictional High Court has held that the business of the assessee should be held to have been set up on the date when first step in the business of assessee was taken up. The Learned CIT (Appeals) accepted the assessee's contention after observing and holding as under:- "The substance of the submission made by the appellant is that the assessee company is engaged in the business of developing/constructing multi-stories as part of the exclusive SEZ project proposed to be called "ASF Insignia". That the appellant company was incorporated on 6.9.2005 and its first accounting year ended ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relied upon by the appellant it is observed that it is an established legal proposition by now that all revenue expenses incurred after the setting up of business and prior to its commencement are an allowable expense. It is observed from the assessment order the AO has proceeded on the concept of commencement of the business which is not in accordance with the decisions relied upon the appellant. That once the first step in the course of various business activities is undertaken the business is deemed to have been set up. From the ratio of the cases relied upon by the appellant as also the following decisions, which are as under:- (i) CIT vs L.G.Electronics (I) Ltd. 282ITR 545 (DEL). (ii) Western India Vegetable Products Ltd Vs CIT 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der and also the order of the Tribunal in assessee's own case for the A.Y. 2009-10 in ITA No. 770/Del/2013, we find that this issue has been decided in favour of the assessee after observing and holding as under:- "6.2. Be it as it may, in the case on hand, the expenses incurred, which have been disallowed by the AO, are in the nature of revenue expenses i.e. business promotion, office maintenance, travelling, salaries etc. The AO was of the view that the assessee has not brought any evidence that it has been carrying on systematic and continuous business activity. The assessee on the other hand submits that it has purchased land, commenced development and has also obtained the required permissions / approvals for the SEZ, promotional act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... easing out the SEZ which is the business of the appellant company. Thus the facts of this case are different than the case law relied upon by the Assessing Officer of Akzo Nobel Car Refinishes India Private Limited (Supra)" 6.4. Thereafter he relied on the decision of Delhi High Court in the case of CIT vs. Hughes Escorts Communication Ltd. 311 ITR 253 and the judgment of the Hon'ble High Court in the case of CIT vs. ESPN Software India (P) Ltd. 301 ITR 368 (Del.) and came to the conclusion that the business activity could be said to have been set up on obtaining of the required licence from the authority. 7. On the ground that the assessee has obtained approval of the said special economic zone from the Ministry of Commerce and a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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