Business set-up inferred from purchases and stock records; High Court upheld Tribunal's factual finding as supported by evidence.

Business is treated as set up when the assessee has taken concrete steps consistent with its composite objects and begun activity showing commercial readiness. Here, purchases of raw materials, component parts and imported items, coupled with closing stock and later sales of spare parts, supported the Tribunal's inference that trading in spare parts formed part of the business and that business activity had begun during the relevant accounting period. The High Court held that this was a factual finding supported by evidence, not a perverse conclusion or one based on no evidence, and answered the question in favour of the assessee.

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Issues: Whether the Tribunal's finding that the assessee had set up and commenced its business during the relevant accounting period was perverse or based on no evidence.

Analysis: The assessee's objects included not only manufacture but also buying, selling and dealing in portable electric tools and component parts. During the relevant accounting period, the assessee made substantial purchases of raw materials, component parts and imported items, all of which were shown as closing stock. The subsequent year's accounts also showed sales of spare parts, supporting the Tribunal's view that trading in spare parts was part of the assessee's composite business. In the context of the distinction between setting up and commencement of business, the acquisition of goods for trading or for use in the business was sufficient material for the Tribunal to infer that business activity had begun. The finding was therefore one of fact supported by evidence and could not be characterised as perverse.

Conclusion: The finding was not perverse and was not based on no evidence; the question was answered in the negative in favour of the assessee.

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