TaxTMI 
TaxTMI 
2011 (11) TMI 193
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.... that Learned CIT(Appeals) has erred in law in holding that income of the assessee in this year is taxable under the head "income from other sources" and not from "profit and gains of business or profession". He further erred in not permitting the assessee to carry forward the net business loss claimed by it at Rs. 1,17,12,473. On the other hand, the grievance of the revenue is that the Learned CIT(Appeals) has erred in directing the Assessing Officer to set off the interest paid by the assessee at Rs. 1,79,37,534 from the interest income of Rs. 62,28,333 and determining the net loss at Rs. 1,17,12,472, though without permission to carrying forward. 2. The brief facts of the case are that the assessee company was incorporated on 22.6.200....
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.... basis of observations of the auditor that assessee has not commenced any business, its interest income deserves to be assessed as income from other sources. In other words, the Assessing Officer is of the view that the assessee has not commenced any business activity, therefore, it is not entitled for interest expenses as claimed by it, similarly the interest income received by the assessee deserves to be assessed as an "income from other sources" and not as a "business income". In this way, Assessing Officer disallowed the claim of assessee of alleged interest expenses amounting to Rs. 1,79,37,534. He assessed the interest earned by the assessee as income from other sources at Rs. 62,25,061. 4. Dissatisfied with the action of the Asses....
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....d observed that tender for land during the year did not materialized, therefore, the business of the assessee of real estates development per se cannot be said to have commenced. He made a reference to the auditor's report and hold that assessee did not carry out any business activity in the year, however, Learned First Appellate Authority was of the opinion that even if assessee has income from other sources then corresponding expenses directly interlinked to such income deserves to be allowed under sec. 57(iii) of the Act. He found that assessee had earned interest income of Rs. 62,28,333. It has paid interest also, thus, there is a direct link between the interest expenses vis-à-vis the interest income, therefore, a set off of the....
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....iness in respect of real estates development was set up during the accounting period relevant to this assessment year and, therefore, it is entitled for carry forward of net business loss suffered in the year. 7. Section 2(13) provides the definition of expression "Business" according to which business includes any trade, commerce, manufacture or any adventure or concern in the nature of trade, commerce or manufacture. The learned counsel for the assessee has referred a large number of decisions noticed above. Similarly, the Assessing Officer has made a reference to the decision of Hon'ble Supreme Court in the case of Tuticorin Alkali Chemicals & Fertilizers Ltd.'s case (supra). In various authoritative pronouncement of Hon'ble Supreme C....
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.... has considered this expression and after referring the decision of Hon'ble Bombay High Court in the case of Western India Vegetable Products Ltd. v. CIT [1954] 26 ITR 151 has observed that Hon'ble Bombay High Court has drawn a distinction between the concept of commencement and setting up of a business. Hon'ble Delhi High Court has reproduced the observations of the Hon'ble Mumbai High Court which read as under: "The Bombay High Court, which was in this case dealing with the corresponding provision of the Indian Income-tax Act, 1922, then explained the distinction between the concepts of commencement and setting up of a business (pages 158 and 159): "It seems to us, that the expression 'setting up' means, as is defined in the Oxford ....