9911796707
TMI Blog2018 (12) TMI 56X X X X Extracts X X X X X X X X Extracts X X X X ..... "1. To set - up, acquire and carry on the business, within India or abroad of developing, manufacture, procure, produce, trading, contracting, franchising, selling, buying, exporting, importing, repairing, maintaining, assembling, engineering service provider or otherwise dealing in all kinds of appliances, equipments, devices, instruments, components, tools, accessories, sensors, controllers, apparatus, machinery, spare parts and other related appliances of heating elements and temperature control systems for any - domestic, commercial ,industrial application and Customer specific solutions." 3. The Memorandum of Association (MoA) also specifies the following objects can be pursued by the assessee for furtherance of the objects stated abo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : Preliminary expense write off allowed as per income tax act 40,563 40,563 (38,16,305) Total income (38,16,300) 5. It can be seen from the Profit & Loss (P&L) account of the assessee that the loss of Rs. 47,14,272 was arrived at as follows:- Particulars Note No. Period Ended Revenue from Operations Other Income Total Revenue Expenses: Depreciation and Amortisation of Assets Other Expenses Total Expenses Profit (Loss) Before Tax Tax Expense: Current Tax Deferred Tax Liability (Asset) Profit (Loss) for the period 11 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Depreciation and amortization. Company was incorporated in Sep 2014. There are zero revenue from operation. The business has set up, however it has not commence operations. Therefore, the expenditure claimed can not be allowed as revenue expenditures. The assessee vide order sheet dated 15.12.2017 was asked why prior period expense of Rs. 53,93,347 should not be disallowed. 5. It was discussed with the AR of the company and admitted the same. The amount is therefore disallowed and added back to the total income." 9. Aggrieved by the aforesaid addition, the assessee preferred an appeal before the CIT(Appeals). The contention of the assessee was that its business has been set up and therefore all revenue expenses should be allowed as a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed premises'). AND WHEREAS, the Lessee is in manufacturing business. The Lessee requires an Industrial shed for manufacturing Industrial heaters and heating systems. AND WHEREAS, the Lessor has expressed his intention to lease the demised premises to the Lessee for manufacturing Industrial heaters and heating systems. AND WHEREAS, the Lessor has represented that he has absolute right and title to grant lease of the demised premises to the Lessee with an exclusive right to use the same for use by the Lessee. AND WHEREAS, relying on the aforesaid and other representations of the Lessor, as herein contained, the Lessee is desirous of taking on lease and the Lessor is desirous of granting the lead of the demised premises, for the pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rce of income. So these expenses cannot be allowed as revenue expenditure. The reliance of the appellant on different decisions is found to be misplaced as none of them was rendered on similar facts as in the case under consideration." 12. Aggrieved by the order of CIT(Appeals), the assessee is in appeal before the Tribunal. 13. I have heard the rival submissions. The ld. Counsel for the assessee brought to my notice the facts which were stated before the CIT(A) and also placed reliance on certain judicial pronouncements. The ld. DR relied on the order of CIT(A). 14. I have considered the rival submissions. The legal position with regard to expenses claimed prior to setting up of business and the sequence of point of time when the busine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regard to the time when a business can be said to have been set up held that it is a finding based on facts of each case. In that case, the business of assessee was distribution of ESPN programming services and the fact of assessee entering into the agreement acquiring license to distribute in India ESPB programme was held to be the point of time when the business was set up. The Court held that if essential activity in the course of carrying on of business is started, then the business must be said to have been set up. 16. Applying the aforesaid principle to the facts of the present case, I am of the view that the three circumstances pointed out by the assessee before the CIT(A) viz., receipt of agency commission, travel by directors to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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