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TMI Blog2018 (11) TMI 1656X X X X Extracts X X X X X X X X Extracts X X X X ..... he brief fact of the case is that return of income declaring income of Rs. 2,59,93,609/- was filed on 14th August, 2012. Subsequently, the revised return of income was filed by the asssesssee on 24th Sep, 2013 declaring total loss of Rs. -91,75,001/- under the normal provision of income tax and income of Rs. 13,67,240/- u/s. 115JB of the act. Thereafter the case was selected under scrutiny by issuing of notice u/s. 143(2) on 16th August, 2013. Further facts of the case are discussed under the respective ground of appeal . Disallowance of Rs. 2,40,18,801/- u/s. 37(1) r.w.s. 3 of the act and Disallowance of Depreciation of Rs. 11138327/- 4. During the course of assessment proceedings the assessing officer noticed that as per note no. 18 of the account, the assessee has debited the following expenses in the profit and loss account:- "Internal Audit Fees Rs. 275752 Statutory Audit Fees Rs, 447526 Director's Sitting Fees Rs. 428000 Filing Fees and Professional Tax Rs. 5423 Electricity Chargers Rs. 1124116 Rent Rs. 4284450 Repairs & Maintenance (Office Bldg.) Rs. 242934 Transferred from PDE pending allocation Rs. 17210600 ------------------------ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IFT is planned as a financial Central Business District (CBD) between Ahmedabad and Gandhinagar as a Greenfield development. GIFT is designed as a hub for the global financial services sector. More particularly, state-of-the-art connectivity, infrastructure and transportation access have been integrated into the design of the city, it is the Company who is looking after development of GIFT. GIFTCL is incorporated on 21" June, 2007 with equal shareholding of Gujarat Urban Development Company (GUDC), a 100% Government of Gujar.at owned company arid Infrastructure Leasing & Financial Services Limited (IL&FS) GIFTCL is a Board managed Company with Government of Gujarat nominating four senior Government Officials as directors including Chairman of the Company who has a second or casting vote. GIFT Project is a public project and structured to provide the required quality infrastructure and facilities. Development of the much required activities for the envisaged "Global Financial Hub" is the object. For developing the required infrastructure and facilities, jt would require 'support from Government and Government agencies, Keeping this in view, Government of Gujarat has transf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of Gabion wall In GIFT 16/01/2012 14/07/2012 14/07/2012 2.51 Street lighting with area lighting for Access road from Shahpur side to GIFT 13/01/2012 11/07/2012 11/07/2012 0.56 Water (WTP & STP) 13/05/2012 09/12/2012 08/12/2017 16.23 District Cooling System(Building level) 01/08/2012 24/11/2013 23/11/2018 77.10 66/35kv substation 27/07/2012 27/07/2013 26/07/2018 27.19 In view of the above detail, the assessing officer was of the view that business of the assesse was not set up till the end of financial year 2011-12 and observed that claim of aforesaid expenditure as revenue expenditure was not allowable. The assessing officer stated that it is evident that the business of the assessee was not set up during the year under consideration and hence the claim of other expenses of Rs. 2,40,18,801 was not allowable as deduction during the year under consideration. Therefore, the assessing officer has treated the same as capital expenditure and added back to the total income shown by the assessee . He has also stated that the business of the assessee was not ready to commence, therefore, the claim of depreciation of Rs. 1,11,38,327/- made by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y commence. The business would commence, when the activity which is first in point of time and which must necessarily precede all other activities, is started. It was further held that in order to determine the question whether, the business of an assessee has commenced or not, it is necessary to consider, what constitutes the business of the assessee. It was also laid down that in determining this question arising under fiscal legislation, one must consider what are the activities which constituted such business without being misguided by the loose expressions of vague and indefinite import ... ... Thus, the Hon'ble High Court has held that in order to determine whether the business of the assessee has commenced or not, it is essential to see what the business of the assessee is. In the case of Western India Vegetable Products Ltd. 26 ITR 151, the Hon'ble Bombay High Court has held as under: " "There is difference between the two expressions "setting up" and "commenced". The expression "setting up" means, as is defined in Oxford English Dictionary, "to place on f foot" or "to establish", and in contradiction to "commence". The distinction is that when is est ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of India, received recommendation from the Institute of Seismological Research and has also received an approval from the Urban Development and Housing Department for land use plan of the GIFT project area. The appellant has also submitted Letters of Intent given to various contractors in respect of carrying out work related to the its business such as notice to commence work for construction, operation and maintenance of water pumping station for water supply to GIFT zone, notice to commence work for power supply arrangement for GIFT project and notice to commence work for pipe network for bore-well connection for GIFT project. The fact that the work had also started in pursuance of these contracts has been established by the appellant by submission of work completion certificates of these contractors. All these evidences clearly establish that the business of the appellant had been set up during the year under consideration. 4.2.5 Considering the facts of the case, the nature of the appellant's business and its objectives, the evidences filed and the judicial decisions referred to above, I am of the viey that in this case, the appellant's business had been set up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nternational Finance Tech. City (Gift City). The company had engaged specialized consultant to undertake various studies for the development of the gift project which included detailed master plan, architectural and engineering design including concept design of building and infrastructure, context study, talent assessment study, skills, demand supply study, demand assessment and feasibility, ICT master plan and design for building ICT infrastructure, real estate and market assessment, soil investigation etc. The assessee has submitted that all these studies had taken place before 31st March, 2011. The assessee company has also obtained various approvals and clearance for implementation of the project as elaborated in detail in finding of the CIT(A) as supra in this order. The assessee company has also issued Letters of Intent to various contractors in respect of carrying out work related to its business such as notice to commence work for construction, operation and maintenance of water pumping station for water supply to GIFT zone, notice to commence work for power supply arrangement for GIFT project and notice to commence work for pipe network for bore-well connection for GIFT p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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