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TMI Blog2009 (8) TMI 28X X X X Extracts X X X X X X X X Extracts X X X X ..... be said to have been set up only on 1.2.1996 when the bank account was opened and not prior thereto. 2. The facts of the case are that the assessee company was incorporated on 27.7.1995 as a financial enterprise, with its main objects according to the memorandum of association, to carry on the business of financing of all kinds of goods including consumer goods and consumer durables etc., to purchase or finance all kinds of financial instruments, to finance private industrial enterprise in India by way of loans or advances and so on. The first board meeting was held on 12.08.1995 in which additional directors, executives and auditors were appointed. On 4.9.1995 the company placed orders for purchase of computers and peripherals. During the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had been "set up" with effect from 1.11.1995. He took the view, disagreeing with the assessee, that the business can be said to have "set up" only on 1.2.1996 when the bank account was opened in the assessee's name and therefore only the expenditure incurred thereafter can be allowed as a deduction. He accordingly disallowed the expenditure to the extent of Rs. 12,92,557/-, being the aggregate of Rs. 6,47,557/- incurred by the assessee and Rs. 6,45,000/- incurred by Expo Machinery Limited on behalf of the assessee. The view taken by the Assessing Officer having been confirmed by the CIT(A) and hence the assessee is in further appeal before us under Section 260A of the Income Tax Act, 1961. 4. On the basis of the aforesaid, the issue which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anufacture of a product, or leading of property, or sole selling agency or financial business or it is a hospitality industry (such as a hotel) or a service industry (such as financial or marketing services). The assessee before us is a financial company authorized to advance loans for interest to facilitate customers to purchase consumer durables, though the business is not limited to advancing monies for acquiring consumer durables. We have already referred to the memorandum of association in this regard. The business is not also limited to consumers who propose to buy products of Kelvinator India Limited or Whirlpool India. In the case of a company engaged in rendering financial services, it is possible to say that the business is set up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... staff were put in place by the end of October 1995 and the company was ready to commence its business from 01.11.1995. M/s S.R.Batliboi Consultants Pvt Ltd had also submitted their bill dated 30th October 1995 for Rs.2,91,486 for professional services rendered in connection with recruitment of 19 candidates for the post of accounts manager and incidental expenses. The fact that the foreign loan and FIPB approval for equity investment by the Whirlpool Corporation of USA were given in January, 1996 does not mean that the business was not set up before these events. These are not statutory formalities and even without the foreign loan and the equity participation of the assessee-company was in a position to carry on the business in accordance ..... X X X X Extracts X X X X X X X X Extracts X X X X
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