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TMI Blog2024 (3) TMI 661X X X X Extracts X X X X X X X X Extracts X X X X ..... is not in dispute that the assessee is into real estate business. It is also not in dispute that the assessee has purchased land for its real estate purchases and has shown in the balance sheet as inventories/stock-in-trade. Therefore, in our view once the assessee has purchased the land for its business purposes and shown it as inventory and as stock-in-trade in the balance sheet it cannot be said that the assessee did not commence its business operations during the year under consideration. The Jurisdictional High Court in the case of CIT Vs. Dhoomketu Builders Development P. Ltd. [ 2013 (4) TMI 668 - DELHI HIGH COURT] on identical facts held that the commencement of real estate business would normally start with the acquisition of land o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iness, the upholding of disallowance by CIT(A) is highly arbitrary and without any basis. (iii) That non-earning of revenue per se being not relevant for the purpose of valid claim of expenditure which is otherwise incurred for the purpose of business, the impugned disallowance is illegal and wholly misconceived. (iv) That in absence of any dispute with regard to genuineness and veracity of claim of expenditure, the impugned disallowance is illegal and merely on mechanical basis. (v) That the disallowance of expenditure is contrary to past history and without appreciation of facts of the case and settled legal position. 2. That the orders passed by lower authorities are not sustainable on facts and are bad in law. 3. That the appellant crav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appellant company was incorporated in the year 2013 with primary object of dealing in real estate. There is no dispute with regard to genuineness of claim of expenses which is duly supported from documentary evidences and the disallowance is only on technical ground that in absence of any income from business operation, the claim of expenses is not allowable. 4.1 Ld. Counsel submits that the claim of expenses are in the nature of employee cost and general administrative expenses, the details of which are appearing at Page 6 and 7 of the CIT(A). In fact, this is a case of corporate entity and same is required to carry out statutory obligation. The main component of expenses is on account of salary to employees which was paid after deducti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wance of expenses. It is submitted that nonearning of income per se cannot he the ground for disallowing claim of expenses. 5. Ld. Counsel for the Assessee placing reliance on the decision of the Jurisdictional High Court in the case of CIT Vs. Dhoomketu Builders Development P. Ltd. (368 ITR 680) submits that on identical circumstances the claim for expenses was allowed holding that the business would be treated as commenced upon purchase of land by the assessee who is in the business of real estate. 6. Heard rival submissions, perused the orders of the authorities below. On perusal of the assessment order, we noticed that the only reason for not allowing the expenditure/loss claimed by the assessee is that the assessee did not generate any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 permissible deductions. The question as to when a business can be said to have been set up is a question of fact to be ascertained on the facts and circumstances of each case and considering the nature and type of the particular business and no universal test or formula applicable to all types of businesses can be laid down. The commencement of real estate business would normally start with the acquisition of land or immovable property. When an assesses whose business is to develop real estate, is in a position to perform certain acts towards the acquisition of sand, th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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