TaxTMI 
TaxTMI 
2010 (2) TMI 779
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....48 which was served on the company on 20th Feb., 2003. In response to this notice, the assessee filed fresh return, which was the same as the return originally filed. The AO completed the assessment u/s 143(3) vide his order dated 03-12-2003, wherein he has held that the assessee has not commenced business and the expenditure in question claimed by the assessee was not allowable as it is capital expenditure. Aggrieved, the assessee carried the matter in appeal before the first appellate authority without success. Further aggrieved, the assessee is before us. 3. The grounds raised by the assessee are on the following issues: a) whether the reopening is bad in law. b) Whether on the facts and circumstances of the case, it can be said that the assessee had set up its business during the impugned previous year and whether the expenses in question were to be allowed as revenue expenses c) Whether the assessee was entitled to claim for depreciation; and d) Whether the AO was right in levying interest u/s 234B. 4. The learned counsel for the assessee Mr. Nitesh Joshi submitted that the reopening in this case was bad in law for the reason tha....
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....in manufacture. Similarly, he submitted that in the case of Metropolitian Springs Pvt. Ltd. vs. CIT 132 ITR 893, the Bombay High Court was deciding the issue whether the assessee started manufacture or not. He submits that the judgment of the Hon'ble Supreme Court in the case of CWT vs. Ramaraju Surgical Cotton Mills Ltd. 63 ITR 478 is in favour of the assessee. On a query from the Bench whether it is the case of the assessee that the business was set up as on 01-04-1999, the learned counsel Mr. Nitesh Joshi submitted that one of the option is that the Tribunal has to set aside the issue to the file of the AO to determine the date as on which the business was set up. 6. On the issue of levy of interest u/s 234B, Mr. Nitesh Joshi initially advanced elaborate arguments but later submitted that in view of the smallness of the amount, he does not press the issue. He submitted that both the development expenditure and depreciation have to be allowed to the assessee. 7. The learned DR, Shri Ajay Kumar Srivastava, on the other hand, opposed the contentions of the assessee and submitted that the assessee in the notes of account has clearly stated that the expenditure in que....
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....otice for reopening. We find that the view of the AO is a possible prima facie view, which is based on the statement of accounts and audited accounts filed by the assessee. It cannot be said that this view would not have been taken by any reasonable person. In fact this view is taken by the assessee himself in its annual accounts and the Auditors have approved the same. It is well settled that, at the time of reopening, the AO needs to take a prima facie view, and need not indulge in investigation of facts or obtaining legal evidence. It is well settled that the adjudicating authority does not have the jurisdiction to go into the sufficiency of the reasons. The original return in this case was processed u/s 143(1) and it cannot be said that the AO has taken a considered view. The reopening in question was well within the four years. The Hon'ble Supreme Court in the case of Rajesh Jhaveri Stock Brokers 291 ITR 500 considered this issue. Applying the propositions laid down in that judgment to the fact on hand, we are of the considered opinion that the reopening is valid. 11. Coming to the decision relied upon by the learned counsel for the assessee in the case of Desai Brothe....
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....en a business is established and is ready to commence business then it can be said of that business that it is set up. The words "ready to commence" would not necessarily mean that all the integrated activities are fully carried out and/or wholly completed. It held as follows: " Held, (i) that hotel business necessarily comprised variegated activities commencing from the stage of acquisition of a proper and suitable building, making it more suitable and convenient for the hotel business, purchasing linen, cutlery, furniture, etc., appointing the staff as managers, bearers, cooks, etc., and ultimately reaching the stage of receiving customers. It would be de hors the commercial sense to assert that it was only when one reached the stage of receiving customers that one could be said to have set up a hotel business. The Tribunal was not, therefore, justified in reaching the conclusion that the assessee had not set up its business till February, 1968. (ii) On the facts, that as the list of repairs which had been provided before the Tribunal clearly indicated that there were no major structural changes except installation of lifts, making the building more ventilated, et....