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TMI Blog1981 (8) TMI 89X X X X Extracts X X X X X X X X Extracts X X X X ..... nd that the income was from business. The CIT(A) has confirmed the ITO's order. The income which is regarded as income from other sources was interest on a loan given by the company to one of the Directors on an equitable mortgage. Preliminary expenses amounting to Rs. 795 had not been allowed on the ground that the assessee had not commenced business on the date on which the loan was given. 2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd (c) Prem Conductors (P) Ltd. vs. CIT 1976 CTR (Guj) 324 : (1977) 108 ITR 654 (Guj). However, none of these decisions support his contention as we shall presently see. In this case, even if money lending or depositing of money was one of the objects of the company, it was incidental or ancillary to the attainment of the main object of the company. It is important to bear in mind that even if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t connected with the manufacturing activity of the company which is mentioned in the list of main objects. The money was lent only because it was considered in the interest of the company to do so until the manufacturing business was started, thus separating the actual lending from the main objects. That being so, it cannot be said that the company had started business when lending money. 3. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly, that of Sarabhai Management Corpon., it was held that there may be an interval between the setting up of business and commencing of the business and all expenses incurred during that interval would be a permissible deduction. In that case, the assessee was held to have commenced its business activity before the expenses in question were incurred. These decisions have no bearing on the present ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nto main and ancillary has been introduced only from that date. The cases cited above are those relating to companies formed before that date and, therefore, the proposition laid down in Prem Conductors that company can commence business in any one of the categories mentioned in the object clause must be read to mean that the company can do so only by doing business in any one of the activities me ..... X X X X Extracts X X X X X X X X Extracts X X X X
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