9911796707
TMI Blog2023 (6) TMI 732X X X X Extracts X X X X X X X X Extracts X X X X ..... pre-operative expenses. The appeal of assessee is allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... e may summon such information from the parties concerned. 12. It is trite that he so sets up the premise has to prove it. An appellate authority can only verify the correctness or otherwise of the evidence led before that authority and not go on collecting the evidence on behalf of the appellant. Since the appellant was making a claim that the findings of the Ld. AO that the appellant has not commenced its business during the previous year relevant for AY 2013-14 was incorrect it is incumbent upon the appellant to prove that correctness of its claim against the revenue and the appellant has to do the same on its own and not through the instrumentalities of this office. 12. As the appellant could not lead any independent third party evidence to corroborate its claim that it has commenced its business during the previous year relevant for AY 2013- 14 and the books of accounts being relied upon were only self-same evidence, the claim of the appellant that its business has commenced as claimed is held to be incorrect. 13. As during the year the appellant has gross receipts of Rs. 17,04,184/- being the interest earned on deposits and the exchange rate fluctuations income, the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice and enforce the demand." 4. The assessee is in appeal raising following grounds :- 1. "On the facts and in the circumstances of the case the order passed by the Ld. CIT(A) is perverse as he failed to consider the voluminous and relevant evidence like purchase orders and confirmations by the vendors etc. 2. On the facts and circumstances of the case Ld. CIT(A) erred in law in holding that the assessee had not commenced the business in the relevant previous year. 3. That on the facts and in circumstances of the case Ld. CIT(A) erred in enhancing the assessed income by making further addition of Rs. 12,78,138 as income from other sources u/s 57 of the Act and by disallowing the loss of Rs. 1,06,54,210/-, which was allowed to be carried forward by the Assessing Officer. 4. On the facts and circumstances of the case the Ld. CIT(A) erred in not deleting the following addition :- (a). Addition on account of brokerage and commission of Rs. 3,21,942/- (b). Addition on account of business promotion of Rs. 4,44,300/- (c). Addition on account of vehicle running expenses of Rs. 3,33,976/- (d). Addition on account of Research and development Expenses of Rs. 1, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned under the Act and that set up of a business connotes of situation where the assessee is in a state of readiness to undertake its business which was very much established in the case of assessee. Ld. Counsel placed reliance on the judgments of Hon'ble Delhi High Court in Carefoul WC & C India (P.) Ltd.368 ITR 692, CIT vs. Samsung India Electronics Ltd.[2013] 356 ITR 354 (Delhi) and Dhoomketu Builders and Developmen (P) Ltd.216 Taxman 27 for aforesaid contentions. 7. On the other hand, Ld. DR relied the findings of Ld. Tax Authorities below. 8. Appreciating the matter on record, it can be observed that primarily the Ld. AO was pleased to draw conclusion that assessee is in the state of incorporation only because assessee company has not made any investment in the purchase of plant and machinery. The Bench is of considered view that while dealing with the question as to if assessee has set up its business, the nature of business activity need to be examined by Ld. Tax authorities and without examining the same on the nature of expenditure alone the question cannot be sufficiently answered. 8.1 It appears that Ld. Tax Authorities below have fallen in error in construing the natu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken. " 11.1 At the same time in the case of CIT vs. Saurashtra Cement & Chemical Industries Ltd.[1973] 91 ITR 170, Hon'ble Gujarat High Court had taken into consideration the argument of Revenue, based on the decision of Hon'ble Supreme Court in Commissioner of wealth Tax V. Ramaraju Surgical Cotton Mills Ltd. [1967]63ITR478, that in the absence of plant and machinery being installed the business cannot be said to be set up had observed as follows :- "8. The argument of the revenue based on these observations was that extraction of limestone by quarrying leased area of land was merely in the nature of preparation for the establishment of the business of the assessee and the business of the assessee could be said to have been set up only in June, 1960, when the installation of the plant and machinery was completed and the unit was ready to discharge the function for which it was being set up, namely, manufacture of cement. This argument is, however, fallacious because it overlooks that these observations were made by the Supreme Court while considering the question as to when a unit of an industrial undertaking can be said to have been set up and they were not intended to refer ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
