TaxTMI 
TaxTMI 
2014 (4) TMI 999
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....dated 14.12.2007. 2. The only issue arising in the instant appeal is the maintainability in law and in the facts and circumstances of the case of the disallowance of the loss of Rs.36,63,262/- claimed by the assessee under Chapter IV-D of the Act. 3. The brief facts of the case are that the assessee-company was incorporated on 11.02.2005 to carry on: a) the business as operators of carriers, transport vehicle, agricultural vehicles, commercial vehicles, and vehicles of all other descriptions; and b) the activity of providing services and facilities of letting on hire, buying, selling, hiring, licensing, repairing, maintaining, etc. of vehicles of all descriptions as well as equipment, accessories and spare parts. The return o....
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...., i.e., in principle. Reference was made to the decision in the case of CIT vs. Industrial Solvents & Chemicals (P.) Ltd. [1979] 119 ITR 608 (Bom.); and CWT vs. Ramaraju Surgical Cotton Mills Ltd. [1967] 63 ITR 478 (SC); the apex court in the latter cases approving and applying the principles laid down in Western India Vegetable Products Ltd. (supra), also stating the facts of the said cases as well as quoting there-from to bring forth clarity to the matter. The law was, in fact, well settled, and the question stands answered by the hon'ble courts on the facts of a particular case, as was in the case of Sarabhai Management Corpn. Ltd. vs. CIT [1976] 102 ITR 25 (Guj.), since confirmed by the apex court and relied upon by the assessee before ....
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..... 13-15). The payment of the school fee of his children is thus only a part of the Directors' remuneration, and by itself to no adverse consequence. The company had been incorporated to carry on the business of providing operating leases of vehicles to customers and the appointment of the MD on 15.02.2005 was only toward the same (PB pg.12). Further, the Chief Operations Manager had also been appointed, with the offer letter by the company having been accepted by him on 03.03.2005 (PB pgs. 12(a)-12 (d)). 5. We have heard the parties, and perused the material on record. 5.1 The question before us is whether the assessee company can be said to have set up its business during the relevant year and, if so, when? Without doubt even as obse....
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....estion, then, that falls for consideration is when the business can be said to have been set up. As explained, it is when the company (entity) can discharge the functions for which it (the firm) is established; the apex court applying the principle laid down in Western India Vegetable Products Ltd. (supra) in Ramaraju Surgical Cotton Mills Ltd. (supra) to decide if in the facts and circumstances of the said case could the company's unit be said to have been set up or, equivalently speaking, established, to answer the question in the negative in-as-much as the manufacture of absorbent cotton wool, for which the unit was being set up, could not take place or be produced. It is only when it could start functioning as a business or a manufactur....
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....Manager join? When was the other staff, along with their names and reference to the different positions/functions they are to discharge? When was the office premises purchased or taken on rent or hire? What is the furniture and fixture - without which the premises cannot be put to use, acquired and when? We say so as the company's financial statements (PB pgs. 16-24) do not reflect the same. Has the company procured the necessary hardware in terms of computer systems or has it only made some preliminary purchases thereof, i.e., in the process of setting up its' infrastructure? Has the company procured the necessary software for operating its computer systems, even assuming the same to have been purchased in the numbers necessary to complete....
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....y is clearly in the setting up stage. Besides, clearly, it is only the expenditure, post set-up, that could be claimed as a business expenditure, while admittedly the company has claimed the entire expenditure incurred by it since inception, including as it appears expenditure on its' incorporation itself, which are only, like wise, capital costs. Alternatively speaking, the implication of no incorporation expenses or the company being established on the very date of its incorporation, are both unsupported as well as bizarre propositions. No case for allowance of the assessee's claim u/s. 37(1) or section 32(1), as the case may be, is accordingly made out. 5.3 The assessee has placed some case law in its compilation, to which no referenc....