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TMI Blog2023 (6) TMI 273X X X X Extracts X X X X X X X X Extracts X X X X ..... ned expenses claimed by the assessee pertains to the business expenses and not the preoperative expenses alleged by the lower authorities. As decided in case of Maruti Insurance Pvt. Ltd. [ 2021 (4) TMI 875 - DELHI HIGH COURT ] wherein it was held that the expenses incurred when the entity is ready to do business and when business is conducted cannot be capitalized as in the present case. The present case in hand is in a better footing than the above mentioned case where the business was carried on much prior to the impugned year and there was only a name change subsequently. No justification in holding the impugned expenses as per operative expenses - delete the impugned addition - Ground of assessee allowed. Disallowance of i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the case are that the assessee is a limited liability partnership firm engaged in the business of wholesale distributors and Indian made foreign liquor. The assessee filed its return of income dated 01.10.2018, declaring total income at Rs.Nil. The assessee s case was selected for scrutiny and the assessment order dated 15.04.2021 was passed by the Assessing Officer (A.O. for short) u/s. 143(3) of the Act by making various additions/disallowances. 4. The assessee was in appeal before the ld. CIT(A), challenging the assessment order and the disallowances made by the A.O. 5. The ld. CIT(A) confirmed the addition/disallowances made by the A.O. 6. The assessee is in appeal before us, challenging the order of the ld. CIT(A). 7. G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income for A.Y. 2017-18 on 10.11.2017 which establishes the fact that the assessee s business commenced during F.Y. 2016-17. The impugned disallowance made on pre operative expenses was pertaining to F.Y. 2017-18 and the same was debited to the profit and loss account. The ld. CIT(A) had relied on the decision of the Tribunal in the case of Maruti Insurance Pvt. Ltd. vs. DCIT (Del) dated 10.02.2020 which held that the expenses incurred prior to the operation of the company are not liable as business expenses and are only a pre operative expenses . The ld. CIT(A) also relied on the decision of the CWT vs. Ramaraju Surgical Cotton Mills Ltd. 63 ITR 478 (SC), which held that the commencement of business was on the date of grant of lice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l submissions and perused the materials available on record. It is observed that the partnership firm M/s. Sunder Spirits formed on 09.12.2016 was changed to name and style of M/s. Living Liquidz S M Traders LLP and which was subsequently converted to LLP vide deed dated 23.11.2017. From the recitals of the partnership deed dated 09.12.2016, 15.10.2017 and 23.11.2017, we infer that the object and the purpose of these are identical and was merely a continuation of the initially incorporated firm, i.e., M/s. Sunder Spirit. We do not find any deviation in the business carried out by the assessee firm which is akin to that of the earlier firms which name has been changed to that of the assessee s. The lower authorities have not disputed the fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of CIT vs. Chennai Properties Investments Ltd. [1999] 239 ITR 435 (Mad), which held that the disallowance of interest expenditure paid u/s. 201(1A) of the Act on late payment of TDS is penal in nature and not compensatory. The ld. CIT(A) further held that the same is not business expenditure and cannot be termed as compensatory in nature as alleged by the assessee. As this issue has been covered by the decision of the Hon'ble High Court of Madras in the case of Chennai Properties Investments Ltd (supra), we do not find any infirmity in the order of the ld. CIT(A) and, hence, we dismiss this ground of appeal raised by the assessee. 14. In the result, the appeal filed by the assessee is partly allowed. Order p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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