TaxTMI 
TaxTMI 
2014 (2) TMI 892
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng recorded by the Assessing Officer and the fact that the expense in question is capital in nature and is now allowable as revenue expenses. 04. The craves leave to add, to alter, or to amend any grounds of the appeal raised above at the time of the hearing." 3. Apropos ground No. 2 and 2.1; deletion of addition of Rs. 1,69,72,374/- made on account of pre-operative expenses when the assessee had not started its business during the relevant year. 4. Both the grounds are taken together because both are inter-connected. 5. Brief stated the facts of the case are that the appellant is a private limited company incorporated under the Companies Act, 1956 which is engaged inter-alia in the business of Exploration and Production of oil and gas. For the Assessment Year 2008-09, the appellant filed its return of income declaring NIL income after set-off of brought forward losses and deprecation of Rs. 1,23,42,862/-. The return of income was thereafter processed u/s 143(1) of the Income Tax Act, 1956 (hereinafter „the Act'). The return of income was subsequently selected for scrutiny assessment u/s 143(3) of the Act which was completed on 23.12.2010 determining the total inc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of Income-tax Vs. Neo Poly Pack (P) Ltd (2000) 245 ITR 492 (Del), CWT Vs. RKKR International (P) Ltd (2005) 145 Taxman 322 (Delhi), Apex Court in Union of India Vs. Satish Pannalal Shah (2001) 249 ITR 221 (SC), Berger Paints India Ltd. Vs. CIT (2004) 266 ITR 99 (SC). 7. The ld AR took our attention to Page 10 of the Paper Book, wherein, a perusal of the assessee's balance sheet as on 31.03.2008, reveals that under the heading application of fund, capital work in progress, schedule 5, Exploration Cost has been shown in Schedule V and an amount of Rs. 2,58,15,33,859/- (Rs. 258 crores) is reflected as expenditure; this was pointed out by the ld AR to buttress the fact that the assessee company has already incurred huge expenditure for exploration cost for their business and production of oil and gas. 8. We have heard the rival submissions and perused the record and has gone through the judgments referred by the respective parties. It is a well settled law that in the absence of any change either in fact or in law, principles of consistency itself can be made a basis to uphold the claim of the assessee company. It has been observed by the Apex Court in Radhasoami Satsang (supra) ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....and when the first activity was started with a view to embarking upon the second and then the third activities, it clearly amounted to commencement of the business. Business is nothing more than a continuous course of activities and all the activities which go to make up the business need not be started simultaneously in order that the business may commence. The business would commence when the activity which is first in point of time and which must necessarily precedes the other activities is started as held by Hon'ble Justice P. N. Bhagwati in the case of CIT Vs. Saurashtra Cement and Chemical Industries ltd. 91 ITR 170 (Gujrat High Court). The said decision of the Hon'ble Gujrat High Court was also affirmed by the Apex Court in the case of CIT Vs. Sarabhai Management Corporation Ltd. (1992) 102 CTR (SC) 164 and the said decision has recently been followed by the Jurisdictional High court in the case of the CIT Vs. Aspentech India (P) ltd. 187 Taxmann 25 (Delhi). 10. In the instant case we find that one of the essential activity namely license/ right to explore the blocks has been granted and exploration of blocks has already been started without which no production can take p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ompanies Act, 1956 which is engaged inter-alia in the business of Exploration and Production of oil and gas. For the Assessment Year 2008-09, the appellant filed its return of income declaring Nil income after set-off of brought forward losses and depreciation of Rs. 1,23,42,862/-. The return of income was thereafter processed u/s 143(1) of the Act. The return of income was subsequently selected for scrutiny assessment u/s 143(3) of the Act, which was completed on 23.12.2010 determining the total income at Rs. 1,53,49,579/- after making disallowance in respect of fee to the extent of Rs. 2,90,854/- made u/s 35D being incurred for increasing the authorized share capital. Aggrieved by the said addition, the assessee filed an appeal before the ld CIT(A), who was pleased to delete the said addition. Aggrieved by the said order of the ld CIT(A) the assessee is before us. 15. According to the ld DR the assessee claimed deduction u/s 35D amounting to Rs. 2,90,854/- for increasing the authorized share capital, which was rightly not allowed by the Assessing Officer. According to the ld DR as per the provision of section 29 of the Act, the income referred to in section 28 shall be compute....