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TMI Blog2021 (4) TMI 277X X X X Extracts X X X X X X X X Extracts X X X X ..... s, carried out local purchase, and sales could not have been possible had it not set-up its business. The fact that the assessee had set-up an experience centre in the FY 2009-2010, which was another mode or platform for selling its goods, cannot have us hold that the assessee had not set-up its business in the previous AY. Therefore, the stated absence of the assessee on an online platform, in our view, is non-sequitur in the fact situation obtaining in the instant case. Disallowance of advertising expenditure - HELD THAT:- The submissions made on behalf of the revenue lacked conviction. Although, Revenue did draw our attention to the AO s view qua the issue, which was, that the advertising expenditure had been incurred to build a brand, i.e., goodwill and therefore, should not be allowed as a deduction, it does not impress us. There is nothing on record to show that the expenditure incurred by the assessee, towards advertising, was not laid out or expended, wholly and exclusively, for the purposes of business. The expenditure incurred, in our view, being a business expenditure, which was incurred wholly and exclusively for the purposes of business, and did not lead to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see had filed its return on 27.09.2010, wherein it had declared a loss of ₹ 7,83,71,011/-. The return filed by the assessee was processed under Section 143(1) of the Income Tax Act, 1961 (in short the Act ). Unfortunately, for the assessee, its case was picked up for scrutiny and accordingly, notice under Section 143(2) of the Act was issued. 4.2. Consequent thereto, an assessment order was framed on 19.03.2014 under Section 143(3) of the Act. The said assessment order determined a loss of ₹ 3,66,79,080/-. 4.3. Pertinently, while framing the assessment under Section 143(3) of the Act, the assessing officer made additions concerning the following: (i) Pre-operative expenses amounting to ₹ 3,50,51,978/-. (ii) Advertising expenses amounting to ₹ 60,39,950/-. 4.4. The assessee, being aggrieved by the order dated 19.03.2014 passed under Section 143(3) of the Act, preferred an appeal with the Commissioner of Income Tax (Appeals) [in short CIT(A)]. The CIT(A) allowed the assessee s appeal. 4.5. It is against this order of the CIT(A) that the revenue preferred an appeal before the Tribunal. The Tribunal vide order dated 11.04.2019 dismissed the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning in a case, which point in this direction, then, it can be safely concluded that the business has been set-up and, therefore, any expenses incurred would have to be allowed as a deduction. 6.1 In support of this plea, reliance was placed on the remand report filed by the AO before the CIT(A). Based on the contents of this report, it was sought to be demonstrated that several steps have been taken by the assessee to set-up the business in the previous AYs, which included placing orders in the domestic market. The emphasis was laid on the fact that there was no prohibition in the assessee carrying on its trading activity in the domestic market and therefore, the argument advanced on behalf of the revenue that the goods in which the assessee dealt in were also obtained from its holding company albeit on or after 29.10.2009 had no relevance in the given circumstances. 6.2 In support of this plea, reliance was placed on the following judgments: (i) Carefour WC C India (P.) Ltd. v. Deputy Commissioner of Income Tax, (2015) 53 taxmann.com 289 (Delhi). (ii) Commissioner of Income Tax v. L.G. Electronics (India) Ltd., (2005) 149 Taxman 166 (Delhi). 6.3 It was fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... July 2008 Resolution for opening of Bank Account 2 Aug., 08 Agreement for outsourced employees (including drivers, advisors positioned at dealer s sites and chef) 22 Sept., 08 Date of hiring of 6 senior employees Middle of the year Date of first local purchase 27 Nov., 08 Sales 4 Dec., 08 26 March 09 Date of Customer Orders received from Dawar International electronics Pvt. Ltd. 2 Jan., 09 22 Jan., 09 Date of various purchase orders raised on miele Cie KG 18 March 2009 18 May, 09 14 July 09 Date of agreement with R P Management Communications ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s which the assessee had taken in AY 2008-2009 such as getting itself incorporated and having a PAN number and TAN number allotted to it. 7.3. This apart, there are certain steps that the assessee took in the subject AY, i.e., AY 2010-2011, which included raising purchase orders on its holding company, the details of which are given in the tabular chart, extracted hereinabove. 7.4 The reason that we have only emphasised on the steps taken by the assessee in the previous AY, i.e., AY 2009-2010 is to show that, both, CIT(A) and the Tribunal were correct in concluding, in our view, that the assessee had set-up its business and was ready to carry on the same in the previous AY, i.e., AY 2009-2010. 7.5 Therefore, Mr. Chandra s submission that the business of the assessee was set-up only on 29.10.2009, in our opinion, is not correct. This submission of Mr. Chandra is predicated on one singular fact, which is, that the assessee had launched its experience centre i.e. physical outlet on 29.10.2009. 7.6 It is correctly argued by Mr. Kaushik that there is a difference between setting-up of business and commencement of business. The fact that the assessee had executed lease deeds ..... X X X X Extracts X X X X X X X X Extracts X X X X
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