Contemporaneous evidence of business commencement cannot be ignored; Tribunal's rejection of deduction and depreciation claim was unsustainable.

Contemporaneous records such as a survey report, VAT certificate, returns, assessment material, and purchase and sale vouchers supported the assessee's claim that the food division had commenced in March 2008. The HC held that a fact-finding authority cannot disregard such material without adequate reasons, and the Tribunal's rejection of the evidence was unsustainable. The order was set aside and the matter remanded for reconsideration in accordance with law, with the substantial question answered in favour of the assessee and against the Revenue.

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Issues: Whether the assessee had commenced the food division during the relevant year so as to claim deduction under Section 35(1)(iv) and depreciation on machinery and building, and whether the Tribunal was justified in disregarding the survey report, VAT records and other contemporaneous evidence.

Analysis: The record contained the survey conducted at the business premises, the Commercial Tax Department certificate, the VAT return and assessment material, besides purchase and sale vouchers, all of which supported the assessee's case that production and sales had commenced in March 2008. The Tribunal, while reversing the appellate order, brushed aside these materials and treated the claim as unproved. In a tax appeal, where contemporaneous official records and surrounding circumstances support commencement of the new division, such evidence cannot be ignored without adequate reasons. The Tribunal's approach in discarding relevant material was therefore unsustainable.

Conclusion: The assessee's case on commencement of the food division was accepted for the purpose of the appeal, and the disallowance of deduction and depreciation could not be sustained on the Tribunal's reasoning.

Final Conclusion: The Tribunal's order was set aside and the matter was remanded for reconsideration in accordance with law, with the substantial question of law answered in favour of the assessee and against the Revenue.

Ratio Decidendi: A fact-finding authority must evaluate all material contemporaneous evidence bearing on commencement of business, and an order ignoring such evidence is liable to be set aside for fresh consideration.

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