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TMI Blog2019 (6) TMI 1508X X X X Extracts X X X X X X X X Extracts X X X X ..... financial services. In the process the assessee company had deployed its fund towards earning interest income because during the relevant assessment year the assessee company did not commenced activities with respect to Hotel Business. Since the business of the assessee company during the relevant assessment year was only financial services, the income earned during the relevant assessment year ought to be assessed as business income and the entire expenditure incurred by the assessee for earning such income has to be allowed as deduction - Nothing on record is before us to suggest that the assessee company was indulging in any other business activity during the relevant assessment year - expenditure incurred by the assessee towards sal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 1961 [ Act in short] was issued on 04.09.2014 and served on the assessee against which, the assessee furnished all details. After verification of the details, the Assessing Officer has observed that the main objective for which the company established was for setting up and operating Hotels and resorts. The assessee is yet to commence its business. The Assessing Officer has observed that since the assessee has been deploying funds raised by it in short term lending operations till the time it commences business, the receipt of interest income has to be assessed under the head 'income from other sources'. As there is no income from business activity, the assessee is not eligible to claim expenses of ₹.3,06,89,757/- and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,09,25,509/-. Initially the return was processed U/s.143(1) of the Act and subsequently the case was selected for scrutiny and notice U/s.143(2) of the Act was issued on 08.08.2013. Finally assessment order was passed U/s.143(3) of the Act on 30.03.2015, wherein the Ld.AO made addition of ₹ 2,06,42,360/- towards disallowance of expenditure. 4. The Ld.AO had disallowed the expenditure of ₹ 2,06,42,360/- because the assessee had only earned interest income and the company had not started the operation with respect to hotel and resort business. On appeal the Ld.CIT(A) allowed interest and miscellaneous expenditure to the tune of ₹ 56,42,360/- against the interest income earned by the assessee, however disallowed the expen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning interest income because during the relevant assessment year the assesse company did not commenced activities with respect to Hotel Business. Since the business of the assessee company during the relevant assessment year was only financial services, the income earned during the relevant assessment year ought to be assessed as business income and the entire expenditure incurred by the assessee for earning such income has to be allowed as deduction. Needles to mention, nothing on record is before us to suggest that the assessee company was indulging in any other business activity during the relevant assessment year. Therefore we are of the considered view that the expenditure incurred by the assessee towards salary for ₹ 1,50,00,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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