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TMI Blog2019 (3) TMI 1295X X X X Extracts X X X X X X X X Extracts X X X X ..... d of the relevant previous year under consideration before us. The AO shall provide reasonable opportunity of being heard to the assessee while quantifying the amount of business expenses incurred by the assessee on or after 17.10.2012 till the end of the relevant previous year under consideration before us. Since, both the authorities below failed to consider this relevant and vital event of grant of SEBI approval in favour of the assessee on 17.10.2012, we direct the assessee to produce the copy of aforesaid SEBI approval before the AO for necessary verification and records - The appeal of the Revenue is partly allowed as indicated above. - I.T.A. No. 6687/Mum/2017 - - - Dated:- 13-3-2019 - SHRI PAWAN SINGH, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER For The Revenue : Shri. D.G Pansari (DR) For The Assessee : Shri. Kishor Chaudhari ORDER PER RAMIT KOCHAR, Accountant Member: This appeal, filed by Revenue, being ITA No. 6687/Mum/2017, is directed against appellate order dated 15.09.2017 in Appeal no. CIT(A)-6/IT-42/268/2016-17, passed by learned Commissioner of Income Tax (Appeals)-6, Mumbai (hereinafter called the CIT(A) ), for a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income from other sources. The AO was of the view that the above expenses can not be allowed as business/revenue expenses on the grounds that the assessee has no business activity as it has not obtained necessary approvals to initiate business activities . The assessee in response to query raised by the AO submitted before the AO as under: The assessee is a private limited company. The company was incorporated on 08/08/2011. It acts as an investment manager of PPFAS Mutual Fund. PPFAS, the sponsor got an in principal approval to set up a mutual fund on 12/07/2011. SEBI has approved the assessee company to act as an investment manager of mutual funds. The assessee company made an application to SEBI for approval of the mutual fund scheme on 19/12/2012. It received certificate granting registration for mutual fund on 08/04/2013 . Thus, in fact the business was set up and it commenced operations from the date of incorporation. The assessee further submitted that the expenses incurred by the assessee company was in nature of regular administrative expenses like salaries, rent, SEBI registration fees and other regular business expenses. These expenses were incurred for to obtain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. Mere purchase of raw material and erection of machinery does not amount to commencement of business (K.Sampat Kumar v/s CIT (1986)158 ITR 25 (Mad.) 2. CIT v/s Piem hotel (P) Ltd. (1994 116 CTR 401 (Born). Hotel business was held not to be treated as set up unless the hotel building was completed even though banquet hall in the incomplete hotel building was let out. 3. The question as to when the business of the assessee had commenced is a question of fact, (Precisim Electricals Electronics (P) Ltd v/s CIT (1989) 176 ITR 453(MP). 4.6 The expenditure relating to business can be allowed as deduction only if business was actually carried on at any time during the previous year. As the assessee has not commenced the business and earned any income from that business during the previous year, the expenses incurred by the assessee are treated as pre-operative expenses. The claim for depreciation cannot be allowed either as the assessee had not put the assets into use during the year for the purpose of business. The expenditure incurred before the commencement of the business is to be treated as preliminary expenditure in accordance with Income Tax Act 1961 and the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... siness, the assessee should be allowed depreciation even though SEBI approval is pending. (3) Commissioner of Income Tax-5 Versus Jodecaux Advertising India (P) Ltd. [ITA 241/2015], wherein it was held that- As decided in Western India Vegetables Products Ltd. v. CIT [1954 (3) TMI 59 - BOMBAY HIGH COURT] the important question that has got to be considered is from which date are the expenses of this business to be considered permissible deductions and for that purpose the section that we have got to look to is section 2(11) and that section defines the previous year and for the purpose of a business the previous year begins from the date of setting up of the business. Therefore, it is only after the business is set up that the previous year of that business can be claimed as permissible deductions. (4) Commissioner of Income Tax, Delhi-IV, New Delhi vs. ESPN Software India (P) Ltd. [301 ITR 368], wherein it was held that- ......the business of the assessee could be said to have been set up on September 3,1995, as prior to this necessary agreements had been entered into, key personnel had been recruited and the assessee-company had started working necess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal before the tribunal. The Ld. DR at the outset submitted that the assessee has received certificate of registration from SEBI on 08.04.2013 which is a date falling after the completion of the relevant financial year before the tribunal and hence business of the assessee was set up after closure of the financial year, thus no expenditure can be allowed as business/revenue expenses keeping in view provisions of Section 3 read with Section 37(1) of the 1961 Act. On the other hand, the Ld. AR of the assessee has relied upon the order of the Mumbai-tribunal in the case of Pinebridge India Private Ltd. v. ACIT, order dated 10.10.2018 in ITA no. 2470/Mum/2011 wherein tribunal held based on factual matrix of the case that the business was set up on the date of incorporation of the tax-payer company and expenses were allowed as deduction from income as revenue expenses/business expenses from its date of incorporation, and hence it was prayed by learned counsel for the assessee that the appellate order dated 15.09.2017 passed by learned CIT(A) be upheld. The reliance is also placed on decision of Hon ble Bombay High Court in the case of Western India Vegetable Products Limited v. CIT r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch approval was granted by SEBI only on 08.04.2013 i.e. after the end of the previous year and hence expenses for the impugned assessment year cannot be allowed. While the learned CIT(A) allowed entire expenses by relying on decision of ITAT Delhi in the case of Whirlpool of India Limited v. JCIT reported in (2008) 19 SOT 593(Del-trib.) and relying on the decision of preceding year in the assessee s own case by learned CIT(A) .As we will see later that both the authorities below have misdirected themselves in arriving at the conclusions . 6.3 Before, we proceed further, it is pertinent to refer here provisions of Section 3 of the 1961 Act, which is reproduced hereunder: [ Previous year defined. 3. For the purposes of this Act, previous year means the financial year immediately preceding the assessment year : Provided that, in the case of a business or profession newly set up, or a source of income newly coming into existence, in the said financial year, the previous year shall be the period beginning with the date of setting up of the business or profession or, as the case may be, the date on which the source of income newly comes into existence and ending wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement company to act as an investment manager to manage mutual fund scheme was missed by both the authorities below. Thereafter on 19.12.2012, the assessee company made an application to SEBI for approval of the mutual fund scheme of PPFAS Mutual Fund. It received certificate from SEBI granting registration for the mutual fund scheme of PPFAS Mutual Fund on 08.04.2013. 6.6 Before we proceed further, it is important to see various statutory provisions which govern the business of the assessee as an asset management company to act as an investment manager for the schemes of Mutual Fund. The asset management company is defined in Regulation 2(d) of Securities and Exchange Board of India (Mutual Funds) Regulations, 1996, as under : Definitions 2. In these regulations, unless the context otherwise requires: - *** *** (d) asset management company means a company formed and registered under the Companies Act, 1956 (1 of 1956) and approved as such by the Board under sub-regulation (2) of regulation 21; Thus, as can be seen from the above definition of an asset management company to be qualified to act as an asset management company, there are twin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period when its] registration has been suspended or cancelled at any time by the Board; (d) the board of directors of such asset management company has at least fifty percent directors, who are not associate of, or associated in any manner with, the sponsor or any of its subsidiaries or the trustees; (e) the Chairman of the asset management company is not a trustee of any mutual fund; (f) the asset management company has a networth of not less than rupees ten crores: Provided that an asset management company already granted approval under the provisions of Securities and Exchange Board of India (Mutual Funds) Regulations, 1993 shall within a period of twelve months from the date of notification of these regulations increase its networth to rupees ten crores. [Provided that the period specified in the first proviso may be extended in appropriate cases by the Board upto three years for reasons to be recorded in writing. Provided further that no new schemes shall be allowed to be launched or managed by such asset management company till the net worth has been raised to Rupees ten crores]. [Explanation: For the purposes of this clause, net wor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or referred to in clause (d) of sub-regulation (1) of regulation 21 and approval of the board of asset management company of which such person is a director, has been obtained; (b) the asset management company shall forthwith inform the Board of any material change in the information or particulars previously furnished, which have a bearing on the approval granted by it; (c) no appointment of a director of an asset management company shall be made without prior approval of the trustees; (d) the asset management company undertakes to comply with these regulations; [(e) no change in the controlling interest of the asset management company shall be made unless, - (i) prior approval of the trustees and the Board is obtained; (ii) a written communication about the proposed change is sent to each unitholder and an advertisement is given in one English daily newspaper having nationwide circulation and in a newspaper published in the language of the region where the Head Office of the mutual fund is situated; and (iii) the unitholders are given an option to exit on the prevailing Net Asset Value without any exit load] [Provided that in case o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to inside information of various activities. Provided further that asset management company shall meet capital adequacy requirements, if any, separately for each such activity and obtain separate approval, if necessary under the relevant regulations.] (3) the asset management company shall not invest in any of its schemes unless full disclosure of its intention to invest has been made in the offer documents [in case of schemes launched after the notification of these regulations.] Provided that an asset management company shall not be entitled to charge any fees on its investment in that scheme. 6.6.8. Regulation 25 of the 1996 Regulation stipulate obligations of an asset management company . The said Regulation 25 of the 1996 Regulation is reproduced hereunder: Asset Management Company and its obligations 25. (1) The asset management company shall take all reasonable steps and exercise due diligence to ensure that the investment of funds pertaining to any scheme is not contrary to the provisions of these regulations and the trust deed. (2) The asset management company shall exercise due diligence and care in all its investment decisions a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid limit of 5% shall apply for a block of any three months. (b) An asset management company shall not purchase or sell securities through any broker [other than a broker referred to in clause (a) of sub-regulation (7)] which is average of 5% or more of the aggregate purchases and sale of securities made by the mutual fund in all its schemes, unless the asset management company has recorded in writing the justification for exceeding the limit of 5% and reports of all such investments are sent to the trustees on a quarterly basis. Provided that the aforesaid limit shall apply for a block of three months.} (8) An asset management company shall not utilise the services of the sponsor or any of its associates, employees or their relatives, for the purpose of any securities transaction and distribution and sale of securities: Provided that an asset management company may utilise such services if disclosure to that effect is made to the unit holders and the brokerage or commission paid is also disclosed in the half yearly annual accounts of the mutual fund. 28*[Provided further that the mutual funds shall disclose at the time of declaring half-yearly and yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lved in violation of securities laws. (15) The asset management company shall appoint registrars and share transfer agents who are registered with the Board. Provided if the work relating to the transfer of units is processed in-house, the charges at competitive market rates may be debited to the scheme and for rates higher than the competitive market rates, prior approval of the trustees shall be obtained and reasons for charging higher rates shall be disclosed in the annual accounts. (16) The asset management company shall abide by the Code of Conduct as specified in the Fifth Schedule. 6.6.9 The Scheme of Mutual Fund shall be launched by asset management company as is provided under Regulation 28 of the 1996 regulation, which provides as under : Procedure for launching of schemes 28. (1) No scheme shall be launched by the asset management company unless such scheme is approved by the trustees and a copy of the offer document has been filed with the Board. (2) Every mutual fund shall along with the offer document of each scheme pay filing fees as specified in the Second Schedule. 6.7. Perusal of the above Regulations of the 1996 Reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its business of an asset management company to act as an investment manager to manage scheme of PPFAS Mutual Fund until the scheme of PPFAS Mutual Fund is approved by SEBI which approval was granted by SEBI only on 08.04.2013 and from then onwards its revenue streams could have started but earning of an income is not a relevant criteria to arrive at a decision as to when the business of the assessee was set up and ready to commence business, In-fact the business of the assessee was set up and the assessee was ready to commence its business once it is approved by SEBI to act as an asset management company in accordance with Sub-regulation 2 of Regulation 21 of the 1996 Regulations which approval was granted by SEBI in favour of the assessee on 17.10.2012. This approval of the assesssee by SEBI granted on 17.10.2012 to act as an asset management company is a statutory clearances without which assessee could not have been appointed as an asset management company to act as an investment manager for the scheme of Mutual Fund because otherwise it was hit by doctrine of impossibility and based on factual matrix of the case and nature of business of the assessee, in our considered view it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agement company in accordance with Regulation 19 of the 1996 Regulations etc. are all preparatory steps undertaken by the assessee in order to set up its business and until the assessee is approved as an asset management company by SEBI in accordance with Sub-regulation (2) of Regulation 21 of the 1996 Regulation, it was not ready to commence its business as it could not have said to have set up its business of an asset management company to act as an investment manager for managing schemes of mutual fund of PPFAS Mutual Fund till aforesaid statutory approval is granted by SEBI vide Sub-regulation (2) of Regulation 21 of the 1996 Regulation in favour of the assessee which was claimed to have been received on 17.10.2012.In the absence of the aforesaid approval by SEBI, doctrine of impossibility will set in and it will be impossible for the assessee to have undertaken business of an asset management company. Thus, PPFAS Mutual Fund could not have appointed assessee as its asset management company to act as investment manager for managing its schemes until this approval under Sub-regulation(2) of Regulation 21 of the 1996 Regulation granted by SEBI is held by the assessee as is mandat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is only on 17.10.2012 on receipt of SEBI approval under Sub-regulation (2) of Regulation 21 of the 1996 Regulation, the assessee business was set up and the assessee was ready to commence its business satisfying the mandate of Section 3 of the 1961 Act to claim its expenses as business expenses and it could be said that the previous year shall commence from 17.10.2012 when its business was set up and ready to commence. The assessee would, therefore, be entitled to claim expenses only with effect from 17.10.2012 when it got approval from SEBI in accordance with Sub-regulation (2) of Regulation 21 of the 1996 Regulations as it is on this date the business of the assessee was set up and was ready to commence its business. So far as period between 17.10.2012 to 08.04.2013 which was interregnum period as the scheme of PPFAS Mutual Fund was only approved by SEBI on 08.04.2013 in accordance with Regulation 28 of the 1996 Regulation wherein the assessee was appointed as an asset management company to act as an investment manager for PPFAS Mutual Fund to manage its scheme, the assessee was conducting its normal business activities as an asset management company which also included seeki ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to decision of ITAT, Delhi in the case of Whirlpool of India Limited v. JCIT reported in (2008) 19 SOT 593(Del.-trib). In this case, the tax-payer company was incorporated on 27.07.1995, as a financial enterprise. The establishment and the staff were put in place by the end of October 1995 and the tax-payer company was ready to commence its business from 01.11.1995. The foreign loan and FIPB approval for equity investment by foreign parent company was given in January 1996. The Revenue was of the view that when the tax-payer company opened its bank account on 01.02.1996, then only its business was set up. The tribunal held that non opening of the bank account will not impede the conducting of the business by the tax-payer nor these approvals are statutory formalities and even without foreign loan and equity participation, the tax-payer company was in a position to carry out its business in accordance with object clause of Memorandum of Association from November 1995 when it had its own offices, branch and regional managers and staff, computers installed and was ready to commence its activities, while in the instant case before us, the commencement of business activities by the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from November 1995 to January 1996 the assessee-company paid salary to the staff and employees through two companies, viz., Kelvinator of India Ltd. and Expo Machinery Ltd. The employees incurred petty expenditure on behalf of the company through imprest amounts sent to them through Kelvinator of India Ltd. A bank account was opened on 1-2-1996 in the name of the company and thereafter the expenses were incurred from the same. 2. For the year ended 31-3-1996 the assessee-company filed its return of income declaring a taxable income of ₹ 94,41,990. While examining the return the Assessing Officer noted that the assessee had claimed expenditure on the footing that the business had been set up with effect from 1-11-1995. He took the view, disagreeing from the assessee, that the business can be said to have been set up only on 1-2-1996 when the bank account was opened in the assessee‟s name and therefore only the expenditure incurred thereafter can be allowed as a deduction. He accordingly disallowed the expenditure to the extent of ₹ 12,92,557, being the aggregate of ₹ 6,47,557 incurred by the assessee and ₹ 6,45,000 incurred by Expo Machinery ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ors (P.) Ltd. v. CIT [1977] 108 ITR 654 the Gujarat High Court held that even securing orders by a manufacturing concern in advance of production can amount to setting up of the business. In CIT v. Sarabhai Management Corpn. Ltd. [1991] 192 ITR 151 the Supreme Court, affirming the view of the Gujarat High Court in Sarabhai Management Corpn. Ltd. v. CIT [1976] 102 ITR 25 held that in the case of a company formed for leasing of property it could not be said that the business was not set up till the first lease took place; the earlier part of the activities, namely, engaging staff, buying the equipment and making the staff familiar with the same are all part of the business and the business can be said to be set up even earlier. A case of marine processing industry was dealt with by the Gujarat High Court in CIT v. Western India Sea Food (P.) Ltd. [1993] 199 ITR 777 1. There it was held that the act of acquiring a godown in the month of August in anticipation of the arrival of fish in the waters in the month of October was held to amount to setting up of the business. The Madras High Court was dealing with the case of a company formed for selling property time-share in CIT v. Club Res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as a hotel) or a service industry (such as financial or marketing services). The assessee before us is a financial company authorised to advance loans for interest to facilitate customers to purchase consumer durables, though the business is not limited to advancing monies for acquiring consumer durables. We have already referred to the memorandum of association in this regard. The business is not also limited to consumers who propose to buy-products of Kelvinator India Limited or Whirlpool India. In the case of a company engaged in rendering financial services, it is possible to say that the business is set up when the directors are appointed, staff such as regional and branch managers are appointed and their salaries are paid, computers are acquired and installed and the company is ready to commence business. It cannot be said that the business was set up only when the bank account was opened on 1-2-1996 because prior thereto the company, though it did not have a bank account, was incurring the expenditure through Kelvinator India Ltd. or Expo Machinery Ltd. The absence of a bank account cannot impede the setting up of the business. We may advert to the evidence in this behalf. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re made on this basis is deleted and the ground is allowed. 6.8.2 Thus, as is observed by the tribunal in the case of Whirlpool of India Limited(supra), when the business of the tax-payer was set up depends upon facts and circumstances of each case and it depends upon the nature of business of the tax-payer. In the instant case before us, non granting of approval by SEBI under Sub-regulation (2) of Regulation 21 of the 1996 Regulation directly impede the commencement of business of the assessee as an asset management company and in the absence of the said approval of the SEBI, the doctrine of impossibility will come into play and the assessee will never be in a position to commence its business. The grant of approval by SEBI was on 17.10.2012 which is the relevant date when the business of the assessee before us was set up and it was ready to commence business . The assessee, thus, shall be entitled to claim expenses w.e.f. 17.10.2012 as deduction as business expenses provided other ingredients of allowability of these expenses are met as laid down in the relevant provisions of the 1961 Act. Thus, our decision in the instant case, is in line with the decision of co-ordinate b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Thus, the business of the assesssee was set up and ready to commence its business when the approval was granted by SEBI in favour of the assessee on 17.10.2012 under Sub-regulation (2) of Regulation 21 of the 1996 Regulation. Without this approval, the assessee was never in a position to commence its business and it was impeded by doctrine of impossibility of commencing its business. Thus, our decision in the instant case, is in line with the decision of Hon ble Jurisdictional High Court in the case of Western India Vegetable Products Limited(supra) with which we are also bound to follow being inferior to Hon ble High Court. The relevant extract of the decision of Hon ble Bombay High Court in the case of Western India Vegetable Products Limited(supra) are reproduced hereunder: Now, it is rather unfortunate that in the order of the Tribunal and also in the question which they themselves have suggested really arises they should have used the expression commenced although in fairness to the Tribunal it may be pointed out that the very interesting question which has been debated at the Bar was never urged, argued or even suggested before the Tribunal, and the question that has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Justice Rowlatt reported in Birmingham and District Cattle By-products Co. Ltd. v. Commissioners of Inland Revenue [1919] 12 Tax Cas 92. In that case the assessee company was incorporated on the 20th of June, 1913, and between that date and the 6th of October, 1913, the directors arranged for the erection of works and the purchase of plant and machinery, and entered into agreements relating to the purchase of products to be used in the business and to the sale of finished products. On the 6th of October, 1913, the installation of plant and machinery being completed, the company commenced to receive raw materials for the purpose of manufacture into finished products. For the purposes of excess profits tax a question arose as to the computation of average amount of capital employed by the company during the accounting period and the company contended that it commenced business on the date of its incorporation, viz., on the 20th of June, 1913, and that the pre-war standard should be based on the profits shown by revised accounts for the period 20th June, 1913, to 30th June, 1914, and Mr. Justice Rowlatt held, upholding the view of the Commissioners, that the business of the company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hased a ground-nut oil mill and was in a position to crush ground-nuts and produce oil. But prior to this there was a period when the business could be said to have been set up and the company was ready to commence business, and in the view of the Tribunal one of the main factors was the purchase of raw materials from which an inference could be drawn that the company had set up its business; but that is not the only factor that the Tribunal taken into consideration. The Tribunal has as pointed out in the statement of the case, scrutinised the various details of the expenses given in the order of the Appellate Assistant Commissioner and having scrutinised those expenses the Tribunal has come to the conclusion even on an interpretation more favorable to the assessee than the one we are giving to the expression setting up that these expenses do not show that the business was set up prior to the 1st of September, 1946. In our opinion, it would be difficult to say that the decision of the Tribunal is based upon a total absence of any evidence. As we have often said we are not concerned with the sufficiency of evidence on a reference. It is only if there is no evidence which would jus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 22. We, therefore, have to determine as to when, in the present case, the assessee was ready to commence business so as to say that the assessee‟s business had actually been set up. In the present case, the assessee shall be entitled to admissible business expenses from the day when the assessee‟s business could be said to have been set up i.e. from the day when the business was ready to commence and not from the date of actual commencement of the business. 23. The assessee‟s contention that the assessee‟s business to act as a trading member and clearing member of the wholesale debt market, capital market and futures and options segments of any Stock Exchange had actually been set up as soon as the assessee company was registered as a private limited company under the Companies Act, 1956, is found to be of without any merit inasmuch as mere incorporation of a company under the Companies Act cannot be a sole factor to establish that the company has set up its business on the day of registration itself. The mere registration of the assessee company under the Companies Act, cannot be said to be the first stage relating to the activity of acting as tradi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents inasmuch as the assessee‟s business was ready to commence on the day when the assessee got provisional registration from the National Stock Exchange. We are, therefore, of the considered view that the expenses incurred on or after 06.12.2004 are permissible for deduction as business expenses and in order to allow these expenses as admissible deduction, it is not necessary that the assessee should have earned some income out of such activity or all the three stages referred to by the Hon‟ble Gujarat High Court in the above referred decision should have been completed. It is enough that the first stage of the business had started in order to claim the business expenses as admissible deduction. We, therefore, hold that the assessee is entitled to a deduction of admissible business expenses incurred by it on or after 06.12.2004 when the business can be said to have been set up by the assessee. We, therefore, direct the Assessing Officer to quantify the amount of expenses in the light of our decision above and allow the same as per law after examining and verifying the genuineness of the expenses and their admissibility under the provisions of Income-tax Act. The AO sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... instant case before us has been duly analysed by us in the preceding para s of this order and detailed reasoning and justification for arriving at the decision is given by us in this order. Thus, we hold that the business of the assessee before us was set up and ready to commence its business on 17.10.2012 when it got approval from SEBI vide Sub-regulation (2) of Regulation 21 of the 1996 Regulation. We, therefore, hold that the assessee is entitled to a deduction of admissible business expenses incurred by it on or after 17.10.2012 when the business can be said to have been set up by the assessee. We, therefore, direct the Assessing Officer to quantify the amount of expenses in the light of our decision above and allow the same as per law after examining and verifying the genuineness of the expenses and their admissibility under the provisions of Income-tax Act which were incurred post 17.10.2012 till the end of the relevant previous year under consideration before us. The AO shall provide reasonable opportunity of being heard to the assessee while quantifying the amount of business expenses incurred by the assessee on or after 17.10.2012 till the end of the relevant previous yea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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