TaxTMI 
TaxTMI 
2012 (4) TMI 150
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.... assessee is a Government company and is engaged in the business of promoting and organizing minor ports in the State of Gujarat. 3. For the assessment year under consideration the Assessing Officer basing reliance on the decision of the Apex Court in the case of Tuticorin Alkali Chemicals and Fertilizers Ltd. v. CIT [1997] 227 ITR 172/93 Taxman 502 (SC) disallowed the entire expenditure incurred by the assessee during the year and held that the income of Rs.19.79 lakhs received by the assessee during the same period would be taxed. This was on the basis of the opinion of the Assessing Officer that the business of the assessee had not yet commenced. 4. The assessee carried the matter in appeal. CIT(Appeals) dismissed the assessee's appeal....
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....and developers, all kinds and forms of minor and major ports, shipyards etc. (b) To plan, erect, work, contract etc., all types of works and appliances related to docks, stages, jetties etc. (c) To undertake, promote, develop all kinds of port-related activities arid rendering all types of services related thereto. (d) To import, provide consultancy service in area of finance including foreign exchange/collaboration etc. (e) To enter into negotiation and contract or collaboration with foreign financial institution and foreign bank etc. Apart from the main objectives there are certain Incidental and ancillary objects also incorporated which are meant to the attainment of main objects. These ancillary objects are ....
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....e the business has been set up, all the expenses incurred after setting up of the business are the revenue expenditure. We have also gone through the decision of the ITAT Bench-D in the case of ACIT v Gujarat State Road Development Corporation Ltd. [ITA No.899/Ahd/2006, order dated 12-12-2008], in which facts involved are the same. In that case also the Tribunal Bench-D has taken a similar view. Therefore, we are of the view that the AO was not correct in holding that the business has not been set up. The business in this case has duly been set up and the AO is directed to treat all the expenses to be the revenue expenditure and allow set off of loss in accordance with law. Thus, all these appeals filed by the assessee are allowed to the ex....
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....see had set up the business and large number of activities were undertaken. The Tribunal, therefore, correctly overruled the decision of the Revenue authorities. 10. Having thus heard learned counsel for the parties and having perused the documents on record, we find that the main objects outlined in the Memorandum of Association for which the respondent company was incorporated included besides others to undertake and carry on the business of promoting, organizing, managing and developing in the State of Gujarat and elsewhere minor and major ports, ship-yards, jetties, harbours and docks as well as to set up warehouses, godowns, open plots etc. appertaining to any dock. It also included the object of setting up infrastructural facilities,....
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....nt. It emerges that the company entered into collaboration with Adani Port Limited ("APL" for short) and set up a joint venture company called Gujarat Adani Port Limited in which the respondent company had 26% equity share. General public, foreign investors etc. held 49% equity share, remaining 25% equity share was held by APL. During the year relevant to assessment year 2001-02, the company had investment of Rs.15 crores in APL. Besides thus carrying out joint venture activities with APL, the assessee had also undertaken various other activities, as can be seen from its communication dated 26.5.2004 to the Commissioner (Appeals) and had actively participated in the management of the said company. 13. From the documents on record, we furth....
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....] 26 ITR 151 observed that for deciding when a company could be said to have set up its business, what the Court has to consider is whether the business of the assessee consists of different categories and whether the activity, which was started earlier is said to have been the essential part of the business activity of the assessee. The Court held and observed as under:- "Thus, it is clear in the light of the decisions of this High Court in Saurashtra Cement and Chemical Industries' case [1973] 91 ITR 170 (Guj) and Sarabhai Management corporation Ltd.'s case [1976] 102 ITR 25 (Guj) that what the court has to consider is, whether the business of the assessee consists of different categories and whether the activity which was started earlie....