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TMI Blog2023 (7) TMI 1302X X X X Extracts X X X X X X X X Extracts X X X X ..... l expenditure if such an expenditure has been incurred wholly and exclusively in a specified business. There is no condition of any date or year of commencement of specified business. However, in the second part, it has been provided that if such an expenditure has been incurred prior to the commencement of business and has been duly capitalized in the books of account, the claim will be allowed in the year in which the assessee commences operations of his specified business. There is neither any overlapping nor any contradiction in the aforesaid provision. The assessee is covered in the first part i.e. the assessee has incurred the expenditure on the specified business during the year in which operations of his business of warehousing w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5/-. Subsequently, the said assessment order was subjected to revision u/s 263 of the Act. On the basis of the verification of material available on records, it was found that the assessment order u/s 143(3) dated 28.12.2016 was erroneous so far as it is prejudicial to the interest of the revenue on the following ground: it has claimed a deduction of Rs. 7,73,14,356/- u/s 35AD of the Income Tax Act. The above expenditure was actually incurred by the assessee after commencement of the business and claimed in the next previous year in which the business operation was commenced. As per the provisions of section 35AD of the act certain criteria are required to be fulfilled but the assessee fails to produce any such fulfilment and hence, cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oticed that a similar issue having identical fact was a subject matter of the assessee's appeal for the A.Y. 2011-12 to 2014-15 in ITA No. 239/Chd/2016 others, wherein the issue has been decided in favour of the assessee and the relevant findings have been given in para 10 to 14 which read as under: 10. Now coming to the issue on merits taken by the assessee vide ground Nos. 4 and 5 of the appeal. The brief facts relating to the issue are that the assessee has claimed deduction u/s 35AD of the Act from its profits on account of construction of warehouses in different Districts of Haryana, however, the AO has disallowed the deduction observing that as per the proviso to Section 35AD of the Act, the expenditure incurred wholly and ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he commences operations of his specified business, if- (a) the expenditure is incurred prior to the commencement of its operations; and (b) the amount is capitalized in the books of account of the assessee on the date of commencement of its operations. 12. A perusal of the above provisions of Section 35AD of the Act reveals that assessee is eligible to claim deduction in respect of capital expenditure if the same is incurred wholly and exclusively for the purpose of any specified business carried out by him during the previous year in which such expenditure is incurred. However, in cases where such expenditure is incurred prior to the commencement of its operations by the assessee and amount is capitalized in the books of account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment are decided against the assessee whereas the grounds taken on merits regarding the allowability of the claim of deduction u/s 35AD are allowed in favour of the assessee. So respectfully following the aforesaid referred to order dt. 19/03/2019 in assessee's own case for the A.Y. 2012-13 in ITA No. 239/Chd/2016, the present case is remanded back to the file of the A.O. to be decided as per the directions given in the aforesaid referred to order dt. 19/03/2019. 5. We are in agreement with the above decisions of the Chandigarh Bench of the Tribunal. In view of this, the disallowance made by the lower authorities is ordered to be deleted. 6. Since, facts and issues involved in both the appeals are identical, hence, our findings ..... X X X X Extracts X X X X X X X X Extracts X X X X
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