9911796707
TMI Blog2007 (9) TMI 289X X X X Extracts X X X X X X X X Extracts X X X X ..... on of furniture. (5) The Commissioner of Income-tax (Appeals) erred in law and on facts in ignoring the objections of the assessee regarding the payment of the expenses of Rs. 1,51,668. (6) The Commissioner of Income-tax (Appeals) erred in allowing only 50 per cent of the expenses claimed in respect of payments made to the employees. (7) The Commissioner of Income-tax (Appeals) erred in holding that the main business did not commence and the business involved in earning interest from its advances. (8) The Commissioner of Income-tax (Appeals) erred on facts and in law in holding that payments of legal expenses to Messrs. Little Co. was capital expenditure and further erred in confirming disallowance of Rs. 2,89,650 paid to Shri V. Mohan, Internal Auditor. (9) The Commissioner of Income-tax (Appeals) erred in allowing only a part of expenses claimed by the assessee on account of travel, repairs and maintenance, software expenses, telephone and miscellaneous expenses without giving any reasons whatsoever. (10) The Commissioner of Income- tax (Appeals) erred in law and on facts in sustaining the difference allowance of Rs. 15,27,835. (11) The Commissioner of Income-tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udit report submitted with the return, the auditors in Form No. 3CD at item 4 mentioned a note about the expenditure debited to the profit and loss account at Rs. 1,51,668 (refers to Note-I of Annexure I), which is as under:- "Annexure I, Sl. No. 1, clause 4(i). The company is of the view that the expenditure is incurred on renovation of existing furniture of the occupied building and hence considered as revenue in nature." Both the views of the auditor as well as of the assessee were before the Assessing Officer while processing the return under section 143(1)(a). Since the return was processed without adjustment, it implies that the Assessing Officer accepted the view of the assessee. In any case, it cannot be a mistake apparent from the record as these are two views. The Assessing Officer issued notice under section 154 dated 30-1-1998 and did not pass any order in this behalf. During the pendency of this notice, the Assessing Officer issued notice under section 148 on 28-1-1999 reopening the assessment on following grounds, which were supplied to the assessee on request:- "In this case, the return filed on 31-3-1995 was processed under section 143(1)(a) for returned incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otice under section 154 this was held by the assessing Officer to be mistake apparent from the record and not income escaping assessment. In addition, the nature of dispute itself speaks that it is only a change of opinion. The assessee held one view, the auditors held the other view. And the Assessing Officer on these facts initially allowed it and then held the same to be a mistake apparent from record and not escaped income. It is well-settled law that a change of opinion on the similar set of facts and circumstances cannot amount to reason to believe that income has escaped assessment. The ground for reopening being a change of opinion cannot constitute a valid reason to reopen the assessment. 5. It was further contended that the CIT(A)'s observations on this issue are incorrect. The CIT(A) has mentioned that the issue covered under section 154 pertained to giving effect to TDS interest. The issue of section 148 has been done on right lines. The learned counsel contended that in the reason itself it has been mentioned that the issue of TDS certificate credit in favour of the assessee had already been rectified under section 154. The CIT(A)'s observation that the issue of sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) and (9) of Part (B) of the clause III of the Memorandum of Association of the Company as the Main Objects of the Company and accordingly, the Board hereby authorizes the commencement of the new business of investing the funds of the Company in shares, stocks, debentures, debenture stocks, bonds, obligations and securities issued or guaranteed by any Company constituted or carrying on business in India or elsewhere or in any debentures, debenture stocks, bonds, obligations and securities issued and/or guaranteed by any Government, Sovereign ruler, Commission, Public body or authority, Supreme, Municipal, local or otherwise, whether at home or abroad and of advancing and lending money either with or without security and generally to such persons and upon such terms and conditions as the Board of Directors of the Company may think fit and also to persons undertaking to build on or improve any property in which the Company is interested and to tenants, builders and contractors." Consequently, the activities of investing surplus funds in debentures, bonds, etc., and advancing and lending money were adopted to be the main objects of the company with effect from 3-4-1993. For assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessee, in its statement of facts and grounds of appeal, reiterated the facts and contentions as raised before Assessing Officer. It was emphasized that the assessee by a newly adopted resolution of Board of Directors dated 3-4-1993, had adopted to make the above ancillary objects as the main objects of the assessee-company. The finding of the Assessing Officer that the assessee has not started business activity was challenged. Since the business was started, no expenditure should have been disallowed by the Assessing Officer. The CIT(A) in his order in para 2.5 has referred to the Board resolution and in para 2.6 has referred to the contention of the assessee that the income does not relate to pre-commencement of business but from the objects, which are authorised by the Board of Directors to be the main objects of the assessee, i.e., business of investment and financing, for which all the expenses should be allowed as business expenses. At para 2.7, the CIT(A) has given a finding as under:- "The Assessing Officer has not taken into cognizance the inclusion of the object of investing the funds in shares stocks, bonds etc. The Assessing Officer has alternately argued that e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the argument by observing that 'without going into the legal requirement in this regard, even if we accept the assessee's contention in respect of the new business of investing the funds of the company and earning interest income on that...' This goes to show that, in principle, Assessing Officer does not controvert the resolution and claim of the assessee but when it comes to disallowance of the expenditure, the same is disallowed on the footing that it was not the main business of the assessee. In the order also the Assessing Officer while computing this income has not applied the head 'Income from Other Sources' but assessed 'Gross total income as per computation of income', which is on the basis of Income from Business or Profession, the return also has been filed accordingly. The CIT(A) also though gives a finding that the Assessing Officer has failed to consider the inclusion of these objects but when it came to disallowance of the expenditure the CIT(A) allows part of it. The CIT(A) has failed to take into consideration that the expenditure was incurred by the assessee wholly and exclusively for the purposes of business, though CIT(A) has in words held that the assessee wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so the rationalization of its administration and modernization of its machinery; it may include measures for the preservation of the business and for the protection of its assets and property from expropriation, coercive process or assertion of hostile title; it may also comprehend payment of statutory dues and taxes imposed as a pre-condition to commence or for the carrying on of a business; it may comprehend many other acts incidental to the carrying on of the business. However wide the meaning of the expression may be, its limits are implicit in it. The purpose shall be for the purpose of the business, that is to say, the expenditure incurred shall be for the carrying on of the business and the assessee shall incur it in his capacity as a person carrying on the business. It cannot include sums spent by the assessee as agent of a third party, whether the origin of the agency is voluntary or statutory." The learned counsel contended that the CIT(A) has, in fact, accepted the business activity of the assessee in minced words. However having accepted so, the test of expenses being wholly and exclusively for the purpose of business has not been applied and on surmises and assumptio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 507.98 ----------- Total 844,164.63" ----------- Month-wise details in respect of all the details were furnished. The assessee was engaged in full-fledged business operations of investment in stock, bonds, advances etc. The activities included joint ventures in Euro market, dealings with big investment and financial companies like Kotak Mahindra, Citi Bank, etc. In this type of corporate culture, the assessee cannot run an office without proper staff and qualified Managers and Executives. The assessee's business operations were on a higher scale. It is the assessee's domain to decide as to how many employees will be recruited and deployed for the purpose of its business activity. There is no allegation that the salaries were paid to relatives. The CIT(A) halfheartedly harboured under the impression that the assessee's main business did not commence and disallowance was made. CIT(A) also has not given any finding that the staff employed was unnecessary. She has merely adopted a yardstick of income ratio with the expenditure. 13. Regarding ground No. 8, brief facts are that the assessee claimed expenses of professional fees of Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h was of utmost necessity. The assessee's main business is already commenced. The CIT(A)'s disallowance of this amount was totally unjustified. Regarding the payment to M/s Little Co., there is no existence of joint venture agreement, the same was for management of funds and not for a joint venture, which has been alleged on the basis of misconception. The assessee wanted to have an agreement for management of funds with 'ZEITGEIST' of United States, which is a reputed investment and finance company. The preamble of the agreement makes it very clear that both parties are investment and finance companies in India and UK respectively and intend to expand their investment and finance business to Asia and more particularly to India. The assessee has the requisite experience as Adviser and Consultant in the field of investment and finance in Indian capital market and has agreed to render services to 'ZEITGEIST'. Investment and finance was regular business of the assessee and was being operated on a higher scale. Involvement of foreign participants in the investment and finance business was the business purpose of the assessee and for such participation agreements and various other for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essential for day-to-day business activities of the assessee. The CIT(A) has held that 'Assessing Officer has reported that there were considerable amount of ISD together with the foreign travel expenses clearly indicates that the expenses were not incurred for earning interest' and inter-corporate deposits being major source of earning, interest does not necessitate much expenditure. On these observations, the ad hoc disallowances have been made without going into the details and without assigning any reason. 16. Learned departmental representative on the issue of reopening of assessment contended that pendency of 154 proceedings is no bar against issuing notice of reassessment. Regarding the reasons recorded for reopening, it was contended that the same amounted to escapement of income as the assessee had claimed expenditure as revenue in nature. It was contended that on both the counts initiation of reassessment proceedings was valid. The Assessing Officer had information in possession that the income had escaped assessment. Reassessment proceedings were valid. Order of CIT(A) was relied on. 17. Regarding ground Nos. 3 and 7, the learned DR contended that the alleged change ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... low ability of the expenditure. 21. We have heard the rival submissions and perused the material available on record. Coming to the issue of reopening of assessment, it is evident from the record that when the notice under section 148 was issued, notice under section 154 on the capital or revenue nature of the renovation expenses was already pending. The question before us is whether during this pendency reassessment notice can be issued on the same ground. There is no express bar to issue this notice in the Act. Both are different statutory functions which can be exercised by the Assessing Officer and cannot be held against each other. At the notice stage, it amounts to invoking the statutory function and not deciding the same. During the pendency of 154 proceedings, it can be said that the Assessing Officer was divested of his powers under sections 147 and 148. Under these circumstances, we are of the view that the Assessing Officer had powers to issue notice under section 148 even though the notice under section 154 was issued. Coming to the second objection of the learned counsel for the assessee, the Assessing Officer has mentioned 'on the basis of the information available ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to opine on the admissibility or otherwise of the expenditure. Here also they have referred to the view of the company as well. The controversy in question assumes character of a highly disputable item per se. With the availability of same material-same audit note and same views of the company, we are unable to hold that this amounted to reasons to belief that income has escaped assessment. Consequently, we hold that the reassessment proceedings were not initiated validly. The same is bad in law. 22. Before proceeding further, we see a peculiar case where the assessment is reopened for only a capital/revenue expenditure of Rs. 1,51,668 but ultimately a huge amount of expenditure has been disallowed. We find it expedient to consider the merits of the reassessment also in the interest of substantial justice. 23. Coming to ground Nos. 3 and 7, we have heard the rival contentions and perused the material available on record. None of the lower authorities has disputed the fact that the assessee-company's Board of Directors adopted a resolution dated 3-4-1993, which is reproduced above, making clauses 8 and 9 of Part B (ancillary objects) as main objects of the company. The Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion was entitled to invest its funds in shares, debentures, bonds, obligations, securities, etc. The income earned by the assessee will be taxed under the head 'Income from Business or Profession'. Since the assessee's business had already commenced, the Supreme Court judgment in Tuticorin Alkali Chemicals Fertilizers Ltd.'s case is not applicable to assessee's case. 24. Coming to ground Nos. 4 and 5, we have heard the rival submissions and perused the material available on record. It has not been controverted by the lower authorities that the expenditure in question was incurred for renovation of furniture. We have verified the details also, which are supported by vouchers. Since no new asset came into existence, the amount in question cannot be called capital expenditure and has to be allowed as revenue expenditure. The assessee succeeds on this issue. 25. Coming to ground No. 6, we have heard the rival submissions and perused the material available on record. We have already given a finding that the assessee's main business had commenced. Consequently, the expenditure is to be viewed from this angle. Coming to the reasonability of the expenses, it is clear that the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hese and for other services like consulation of Company Law, FERA, Income-tax and Other Acts, etc. Appointment of internal auditor is a normal function for doing such business. When the fees in this behalf up to June 1993 was allowed, we see no reason to disallow the same for the balance of the period. In any case, the payment to M/s. V. Mohan was in the normal course of business and incurred wholly and exclusively for the purpose of business. The professional fees paid by the assessee is allowed as a business expenditure. Ground No. 8 is accordingly allowed in favour of the assessee. 27. Ground Nos. 9, 10 and 11 pertain to part disallowance of expenses by CIT(A) on account of travel, repairs and maintenance, software expenses, telephone and miscellaneous expenses. Looking at the business dealing of the assessee in investment and finance of higher segment, maintenance of proper software is an essential feature, without which such business cannot be carried on an efficient basis. Similarly, as far as the travel is concerned, the assessee has furnished complete details, which are placed on the paper book which include all the details. The purposes are clearly spelt out, which are u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n nature should have been added back to the total income and, therefore, notice under section 148 was issued to the assessee. It is settled law that merely on the basis of change of opinion, no reassessment proceedings can be initiated. The learned Judicial Member has held that it is a case of change of opinion, but in my opinion, it is not so. Before considering this issue, it would be useful to refer to the amendment brought about in section 147 w.e.f. 1-4-1989. After the amendment if the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment, he can issue notice under section 148. As per clause(c) of Explanation 2 to section 147, in following cases the income chargeable to tax shall be deemed to have escaped assessment:- "(c) Where an assessment has been made but- (i) income chargeable to tax has been under-assessed; or (ii) such income has been assessed at too low a rate; or (iii) such income has been made the subject of excessive relief under this Act; or (iv) excessive loss or depreciation allowance or any other allowance under this Act has been computed." The necessity of insertion of this deeming clause was considered in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Patel v. M.J. Makwana, Asstt. CIT [1999] 236 ITR 832 (Guj.) at page 840. At the initiation stage formation of a reasonable belief is needed and not a conclusive finding of a fact. The word 'reason' in the phrase 'reason to believe' would mean cause or justification. If the Assessing Officer has a cause or justification to think or suppose that income had escaped assessment, he can be said to have a reason to believe that such income had escaped assessment. The words 'reason to believe' only mean that he forms a belief from the examination he makes or from any information that he receives. That income has escaped assessment. If he discovers or finds or satisfies himself that the taxable income has escaped assessment, it would amount to saying that he has reason to believe that such income had escaped assessment. His reasoning may be the result of official information or his own investigation or may come from any source that he considers reliable. In the present case, the cause or justification for forming the belief that the income had escaped assessment is the auditors opinion contained in the Tax Audit Report. In the Tax Audit Report the auditors had classified this amount under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company can commence business immediately on incorporation of company but that does not imply that business has commenced as contemplated under Income-tax Act. For determining whether the assessee has carried on business or not, it is to be examined what steps the assessee has taken in pursuance of its business. 35. There is well established distinction between the business being set up and the commencement of the business. This has been recognized and explained by the Hon'ble Bombay High Court in Western India Vegetable Products Ltd. v. CIT [1954] 26 ITR 151 wherein it has been held that there is clear distinction between a person commencing the business and the persons setting up a business and that for the purposes of the Income-tax Act, it is the setting up of the business that has to be considered and not the commencement. It is only when the business is set up that the previous year for that business commences and expenses incurred prior to the setting up are not a permissible deduction. It has further been held in the decision that when the business is established and is ready to commence the business, it can be said that the business is set up. Before the assessee is read ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ightly classified this expenditure as capital in nature. I am, therefore, of the opinion that this was rightly disallowed by the lower revenue authorities. However, depreciation has to be allowed on this amount. 37. Regarding ground No. 6 dealing with disallowance of 50 per cent of the expenses claimed in respect of payments made to the employees, the facts are that the Assessing Officer had specifically asked the assessee to justify the expenditure in the backdrop of assessee's only income during the year from interest receipts, quantum of which remained almost the same as in the last year. However, in spite of the specific requirement, as per the questionnaire, the Assessing Officer observed that neither any justification nor any evidence was filed in respect of the said claim. He had only allowed a sum of Rs. 44,164 out of Rs. 8,44,164 claimed by the assessee and disallowed the balance of Rs. 8,00,000. The learned CIT(A) noted that the income was mainly earned from tax-free bonds, inter-corporate deposits and advances to three individuals. He noted that there were 20 employees working in the company and the appellant had to maintain an office. Taking into consideration the ove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing any agreement between the assessee and any other person for any purpose relating to the setting up or conduct of the business of the assessee." 40. Ground No. 9 is that the learned CIT(A) erred in allowing only part of the claim on account of travel, repairs and maintenance, software expenses, telephone and misc. expenses without giving any reasons whatsoever. The assessee had claimed a sum of Rs. 14,48,467 under the head 'Travelling and conveyance' which also included a sum of Rs. 11,75,829 on foreign travel. The assessee neither filed any details in respect of foreign travel nor any justification before the Assessing Officer. Therefore, he estimated an amount of Rs. 50,000 and disallowed a sum of Rs. 13,98,467. The learned CIT(A) examined the expenses and noted that the assessee-company was about to commence its main projects subsequently. He treated these expenses as prior period expenses. He has rightly pointed out that the assessee-company was about to commence its main project subsequently which fact was clear from the legal fees paid by it. Therefore, these expenses were also in the capital field. The details of these expenses are contained at page 9 of the paper book ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are of the opinion that the following points of difference are required to be referred to the Third Member and for the purpose we direct that the file be put up to the Hon'ble President. Points of difference:- (1) Whether on the facts and in the circumstances of the case, the reopening of assessment in the case of the assessee for assessment year 1994-95 is proper or not. (2) Whether on the facts and in the circumstances of the case, it can be held or not that the investment and financing business of the assessee had commenced in the assessment year in question. (3) Whether on the facts and in the circumstances of the case, amount of Rs. 1,51,668 incurred on renovation of furniture is allowable as revenue expenditure or not. (4) Whether on the facts and in the circumstances of the case, disallowance of 50 per cent of expenses claimed in respect of payments made to employees is justified or not. (5) Whether on the facts and in the circumstances of the case, sum of Rs. 6,21,250 paid to Little Co. as legal expenses is allowable as business expenditure or as per provisions of section 35D. (6) Whether on the facts and in the circumstances of the case, the amount of Rs. 13 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenses, which mainly are in the nature of pre-commencement expenses for exploring the business, should not be disallowed, as the same need to be capitalized as pre-commencement expenses. Assessee stated, the decision of the Hon'ble Supreme Court in the case of Tuticorin Alkali Chemicals Fertilizers Ltd., is distinguishable. Considering that the assessee has not commenced the business as per the main object quoted hereinabove, Assessing Officer disallowed the claim of the assessee. Assessee approached the first appellate authority. 3. It was contended before the CIT(A) that there was a Resolution passed by the Board on 3-4-1993 to treat ancillary objects as the main objects of the assessee-company, which is quoted by the learned JM at page 6 of his order. It reads as under:- "RESOLVED THAT the consent of the Board of Directors of the Company be and is hereby given to include and treat the ancillary objects of the Company as given in sub-clauses (8) and (9) of Part (B) of the clause ill of the Memorandum of Association of the Company as the Main Objects of the Company and accordingly, the Board hereby authorizes the commencement of the new business of investing the funds of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jects) as main objects of the assessee. Learned JM further noted, in effect the Assessing Officer accepted the proposition that assessee had business activity during the year under consideration but coming to expenditure, he draws a line between expenditure relatable to business and not relatable to business. Learned JM held, since the assessee was entitled to convert the ancillary objects into main objects and having done so, the income earned will have to be treated as income from business and not otherwise. This is because the assessee complied with the Company Law regulation in this regard. 7. On the other hand, learned AM held, there is a clear distinction between setting up of business and commencement of business and this has been made clear by the jurisdictional High Court in the case of Western India Vegetable Products Ltd. He held, by merely making above ancillary object as assessee's main object, it cannot be said that the business has been set up. Assessee has to take various steps before it is ready for commencement of business. Therefore, all the expenses incurred between set up of business and commencement of business are pre-commencement expenses. Learned AM furth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rial available on record. It has not been controverted by the lower authorities that the expenditure in question was incurred for renovation of furniture. We have verified the details also, which are supported by vouchers. Since no new asset came into existence, the amount in question cannot be called capital expenditure and has to be allowed as revenue expenditure. The assessee succeeds on this issue." 12. The issue has been discussed by the learned AM vide para 36 of his order. He held that by renovation of furniture, assessee has obtained an enduring benefit and, therefore, the auditors had rightly classified this expenditure as capital in nature. Hence, he confirmed the view of the revenue authorities. 13. Considering the facts and after going through Paper Book pages 115 to 117, i. e., details of repairs and maintenance, I uphold the view taken by the learned JM. Repairing of furniture is difficult to hold as bringing new asset of enduring benefit. Hence, I agree with the learned JM on this point. 14. The fourth point of difference of opinion is as to whether the disallowance of 50 per cent of expenses claimed in respect of payments made to employees is justified or not. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the learned JM on this point. 20. The fifth point of difference referred for my opinion is as to whether the claim of legal expenses paid to Little Co. of Rs. 6,21,250 is allowable as business expenditure or as per provisions of section 35D? 21. Assessee claimed legal and professional fees of Rs. 9,26,483 against previous year's claim of Rs. 87,300. Assessee was asked to give justification for the enhanced payment. Assessing Officer records that assessee could not link it with its activity of earning only interest income. As such he allowed the expenditure equal to previous year's claim and the balance was disallowed. When the matter was carried before the CIT(A), he held that the payment made to Little Co. was expenditure incurred towards joint venture, which needs to be capitalized. 22. Learned JM vide para 26 of his proposed order records that the assessee was in investment and finance management business and such fund management agreements were executed always in the normal course of assessee's business; whereas Assessing Officer has referred the same as only joint venture as a separate and distinct business activity. It was further the case of the assessee that othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned counsel brought my attention to Paper Book Page 89, which is travelling expenses. Counsel submitted that the expenses are incurred by the assessee for travelling abroad. The revenue authorities had mistaken that the assessee went for negotiations to set up its own business. For example, travel to London for meeting with Barclays, the assessee was only acting as an agent and the assessee was not trying to settle its business. Counsel submitted, this is the same with other foreign trips, where assessee negotiated with Standard Chartered Bank or other financial institutions and banks. Counsel further submitted, this claim of the assessee is to be allowed under section 37(3) subject to rules framed thereunder. In support of the claim, learned counsel relied upon the decision of the jurisdictional High Court in the case of Bralco Metal Industries (P.) Ltd. 29. Considering the fact that the assessee was acting as an agent and was negotiating on others behalf, and also considering that the assessee had commenced its business, I am of the opinion that the view taken by the learned JM is in accordance with law. Hence, I agree with the learned JM on this point. 30. The last point of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r passed by the ld. CIT(A) on 14-3-2001. The appeal was heard. However, there was a difference of opinion between the Members constituting the Bench and therefore, following questions were referred to the Hon'ble Third Member for his opinion under section 255(4) of the Income-tax Act. "1. Whether on the facts and in the circumstances of the case, the reopening of assessment in the case of the assessee for assessment year 1994-95 is proper or not? 2. Whether on the facts and in the circumstances of the case, it can be held or not that the investment and financing business of the assessee had commenced in the assessment year in question? 3. Whether on the facts and in the circumstances of the case, amount of Rs. 1,51,668 incurred on renovation of furniture is allowable as revenue expenditure or not? 4. Whether on the facts and in the circumstances of the case, disallowance of 50 per cent of expenses claimed in respect of payments made to employees is justified or not? 5. Whether on the facts and in the circumstances of the case, sum of Rs. 6,21,250 paid to Little Co. as legal expenses is allowable as business expenditure or as per provisions of section 35D? 6. Whether o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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