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TMI Blog2017 (3) TMI 1668X X X X Extracts X X X X X X X X Extracts X X X X ..... d/2011 preferred against the said very CIT(A)'s order of even date in case no. CIT(A)-I/CC.1(1)/277/2008-09. Relevant proceedings in all cases are u/s.153A r.w.s. 143(3) of the Income Tax Act, 1961, in short 'the Act'. Learned Counsel representing both parties state at the outset that all the Above stated nine cases raise identical issues. We thus take up assessee's five appeals IT(SS)A Nos. 359 to 363/Ahd/2011 pertaining to the above stated assessment years first raising as many substantive grounds therein. 2. Shri Soparkar informs the bench that the assessee does not wish to press for its first substantive ground challenging legality of Section 153A proceedings in all the impugned assessment years. We thus decline this first substantive ground identically pleaded in all five appeals as not pressed. 3. The assessee's second substantive ground in all of its five appeals challenges correctness of both the lower authorities' action disallowing deduction of depreciation, employees' expenditure and general administrative expenses involving varying amounts in all the impugned assessment years. 4. We advert to the relevant facts. This assessee is a company incorporated on 15.12.2000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were made ready and put for sale and the profits therefrom was credited to Profit & Loss account, therefore, business activity of the assessee in that case already commenced because of these sales, which has not been appreciated by the CIT(A). In this case no business activity except part completion of golf courses which also not put in use for commercial use and business activity had not commenced at all. Therefore, expenses under the head office, personal, administrative and depreciation cannot be allowed to the assessee. Learned counsel for the assessee is heard who relied on the decision in the cases of (i) CIT Vs. Club Resorts P. Ltd. (supra) and CIT Vs. Saurashtra Cement & Chemical Industries Ltd., (1973) 91 ITR (Guj). 5. I have heard rival submissions and perused material available on record. It Is clear that no business activity was undertaken by the assessee so as to generate revenue inasmuch as neither golf course was ready nor any membership was enrolled nor any business activity was undertaken. Assessee was at a very early stage of completion of golf courses, therefore, it cannot be held that assessee's business activity had commenced. In the case of Saurahstra C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s decision in CIT vs. Sardar Sarovar Narmada Nigam Ltd. [2013] 37 taxmann.com 344 (Guj.) as followed in the very assessee's tax appeals no. 449/2004 decided on 07.06.2016 as under: "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 commenced only on completion of the Canal is misconceived. What is to be looked into is the setting up of a business and not the commencement of business. All expenses incurred after the setting up of the business but, before its commencement, would be permissible as deduction u/s.10(2) of the Income Tax Act. It was further submitted that interest expenditure u/s.57 of the Act are part of the business expenses of the assessee and therefore, they ought to have been considered as allowable deductions. Learned Senior Advocate, therefore, submitted that the Tribunal committed serious error in rejecting the appeals filed by the assessee. 7.1 In support of his submissions, reliance has been placed on a decision of the Division ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pra) and other judgments, when each one of the activities essential & vital, combined together, constitutes business of the assessee and this being a continuous process, all the activities which go to make a business need not be started simultaneously in order to hold that the business has commenced. Those of the activities which form integral part of entire term business when preceded other activities, no fault can be found in the approach of the Tribunal when it held the business to have been set up without the same being commenced. The Tribunal, by elaboration sound and logical reasonings, has dealt with the entire issue. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... completion of work of entire Canal, the assessee's business can be said to have been set up. In a Project like the "Sardar Sarovar", there are bound to be different stages where different activities take place and those activities being integral part of business and when they are set up phase wise, the assessee cannot be deprived of the benefits of fiscal legislation in disregard of the well settled principles on the issue. In view of the above, we answer both Questions no.1 as also Question no.2 in favour of the assessee and against the Revenue." 8. Shri Soparkar vehemently contends thereafter that we must also hold the assessee to have set up its golf course business even in case of having developed two out of 18 holes therein. We however do not find any merit in this argument. We make it clear that first of all this tribunal's findings in the very facts in first round (supra) have attained finality. We further observe that hon'ble jurisdictional high court has followed hon'ble apex court's decision in Saurashtara Cement and Chemicals Ltd. (supra) in para5 which already stands distinguished in the above extracted co-ordinate bench's decision. We thus find no reason to disturb t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e directed to be adjusted against such cost of the two projects. Learned Departmental Representative fails to dispute the above nonadjudication in the CIT(A)'s order. Shri Soparkar at this stage quotes hon'ble Delhi High Court's judgment in NTPC Sail Co. Pvt. Ltd. vs. CIT [2012] 25 taxmann.com 401 (Delhi) in support of assessee's plea raised in the instant substantive ground. We however are of the opinion that this issue requires a detailed adjudication at assessing authority's level first. More so when it is already supposed to frame consequential computation as directed in the preceding substantive ground hereinabove. We thus accept assessee's instant substantive ground in all of its five appeals for statistical purposes. Needless to say, the Assessing Officer shall afford the assessee adequate opportunity of hearing before taking the final call on this issue. 12. The assessee's fifth substantive ground raising the issue of Section 234B interest is treated as consequential in nature as stated by both the learned representatives. 13. The assessee's five appeals IT(SS)A Nos. 359 to 363/Ahd/2011 are partly accepted for statistical purposes. 14. We now advert to Revenue's tw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng with the addition of Rs. 24,52,497, with regard to which I have already held above that the same is not justified. The Assessing Officer applied the rate of Rs. 70,000 per Vigha to the area of the total land purchased during this year, irrespective of the survey numbers and further made addition on the assumption that the assessee had paid advance. Obviously, if advance is paid, there would be no question of further payment by the assessee. The seized papers bear some rough notings from which no conclusion can be drawn that these notings represent actual transactions and prove actual unaccounted payments made by the appellant-company. It is not known as to by whom these papers were written. The Assessing Officer has mentioned that some of the intermediary farmers were examined by the Department during the course of the search. However, there is no mention in the assessment order as to whether any of these farmers admitted having received unaccounted cash to-be paid to the farmers from whom lands were purchased. Except the aforesaid three seized papers, no evidence has been brought on record by the Department to show that the assessee actually paid on-money on purchase of land. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dditions made as per assessment order Diff. of excess addition made 2005-06 40.58 70000 2840600 426053 2414547 5662497 3247950 2006-07 29.65 70000 2075500 386545 1688955 10110065 8421110 2007-08 160.59 115000 18467850 1297493 17170357 17275057 104700 Total 230.82 23383950 5944091 21273859 33047619 11773760 18. It may be mentioned that this ground of appeal has been raised by the appellant company without prejudice to the main argument that no addition on the basis of seized papers is called for. Thus, it is only an alternative ground. While deciding the main ground, I have already held that for the present assessment year no addition can be made on the alleged ground of payment of unaccounted on money on purchases of land. In view of this, this alternative ground becomes infructuous and does not require to be adjudicated." 17. We have heard both the parties at length. It emerges that the CIT(A) has already examined Assessing Officer's conclusions in light of assessee's disclosure during search as spread over to various assessment years to be already more than the amounts in question. It is further evident that the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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