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TMI Blog2007 (9) TMI 261X X X X Extracts X X X X X X X X Extracts X X X X ..... essee-company which was incorporated on March 17, 1992, is in the business of setting up satellite business communication systems for which a very small aperture terminal ("VSAT") equipment is used. As per the objects of the assessee-company, its main activities are to provide products and services to the digital satellite market place in India and to initially import and gradually produce in India, the "personal earth station" that is otherwise known as VSAT. The VSAT can be used only after establishing, maintaining and using the communication facilities on a licence from the Department of Telecommunications ("DOT"), the Government of India. The assessee made an application to the Department of Telecommunications for grant of such licence. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n March 15, 1995, it could be said that the business of the assessee had been set up only on March 5, 1995. 5. The Assessing Officer rejected the explanation of the assessee and held that the claim for deduction of Rs. 28,96,269 as revenue expenses cannot be permitted. However, the Commissioner of Income-tax (Appeals) ("CIT(A)") disposed of the appeal filed by the assessee by holding that the formal order by the Bank of America on the assessee was placed only on October 6, 1994, and, therefore, this was the date on which the assessee had set up its business. 6. Aggrieved by the decision of the Commissioner of Income-tax (Appeals), the Revenue and the assessee both filed appeals before the Tribunal. Relying on the judgment of Western India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing up of the business. He then referred to the date of setting up of the business in the present case was even earlier to the actual commencement of the business and, therefore, the Tribunal's conclusion required no interference. 9. Section 2(34) of the Act which defines "previous year", in turn refers to section 3(1) which reads as under : "3. (1) 'Previous year' defined - (1) Save as otherwise provided in this section, 'previous year' for the purposes of this Act, means the financial year immediately preceding the assessment year : Provided that, in the case of a business of profession newly set up, or a source of income newly coming into existence in the said financial year, the previous year shall be the period beginning with the da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of commencement and setting up of a business (pages 158 and 159) : "It seems to us, that the expression 'setting up' means, as is defined in the Oxford English Dictionary, 'to place on foot' or 'to establish', and in contradistinction to 'commence'. The distinction is this that when a business is established and is ready to commence business then it can be said of that business that it is set up. But before it is ready to commence business it is not set up. But there may be an interregnum, there may be an interval between a business which is set up and a business which is commenced and all expenses incurred after the setting up of the business and before the commencement of the business, all expenses during the interregnum, would be permi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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