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TMI Blog1985 (4) TMI 106X X X X Extracts X X X X X X X X Extracts X X X X ..... ny was set-up, the expense should have been allowed and the third ground gains in the alternative that at least after purchasing and selling activity was there with the company, the expenses should have been allowed. 3. In other to appreciate the issue, the facts if stated briefly would be of immense help. The assessee is a private limited company which was incorporated on 22nd June, 1978. It had decided to do two businesses, one relating to fruits handling and fruit canning business at Simla and other was manufacture of abrasive powder which is used in the grinding of optical instrument which was to be run at Kanpur. It was on 1st June, 1979 that Kanpur branch was established because the manager was appointed there and the assessee's cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . CIT 1976 CTR (Guj) 324 : (1977) 108 ITR 654 (Guj); (iii) CIT vs. Ralliwoff Ltd. (1979) 8 CTR (Bom) 129 : (1980) 121 ITR 262 (Bom); and (iv) CIT vs. Saurashtra Cement Chemical Industries (1973) 91 ITR 170 (Guj). He, however, did not seem to be very serious about pressing very first contention of the right from incorporation of the company should be allowed. He submitted however that expenses were looked into by the two lower authorities and only one item which was found to be of capital nature was disallowed which is Dunlop house pipe Rs. 777.24 in price. 4. The ld. Departmental Representative, on the other hand, relied on the order of the two lower authorities and submitted that in the light of decision in the cases of CWT v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd lapping powder to be manufactured at Kanpur it was on 1st June, 1979 that company had acquired a leasehold premises at Kanpur and had appointed the manager for Kanpur branch for which necessary for papers and resolutions are placed on assessee's compilation. Identical issue had been considered by their Lordships by a Bombay High Court in case of Western India Vegetable Products Ltd. vs. CIT (1954) 26 ITR 151 (Bom), difference between setting up a business and commencing a business had been dealt with by their Lordships. There Lordships in the said case observed as under: "There is a clear distinction between a person commencing a business and a person setting up a business and for the purposes of the Indian IT Act the setting up of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... established and is ready to be commenced, then it can be said of that business that it is set up. But before it is ready to commence business, it is not set up. Any expenditure during the interval between the setting up of a business and its commencement would be a permissible deduction under s. 10(2) of the Act." 8. We are also fortified by Gujarat High Court decision reported in (1973) 91 ITR 170 (Guj). 9. The reliance of the ld. Departmental Representative on Supreme Court decision in the case of Ramaraju Surgical Cotton Mills Ltd. (1967) 63 ITR 478 (SC) in support of Revenue's contention is misplaced. This case, on the other hand, supports the contention that of the assessee. As per one of the findings of this case, their Lordship ..... X X X X Extracts X X X X X X X X Extracts X X X X
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