TaxTMI 
TaxTMI 
2015 (4) TMI 983
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....that the assessee has not commenced business operations during the previous year (the assessment year being 2007-08). 2. The assessee was incorporated in April, 2005 to carry on the business of out of home advertisement, consisting of street furniture (i.e. advertising on bus shelters, public utilities, parking lots etc.) bill boards and transportation (such as advertisement in airports, railway stations etc.). It was awarded its first contract by New Delhi Municipal Corporation (NDMC) in March 2006 for construction of 197 Bus Queue Shelters (BQSs) on Build-Operate Transfer (BOT) basis. In terms of the contract, the assessee was required to undertake preliminary investigations, study, design, finance, construct, operate and maintain BQSs....
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....or which it is set up. Pre-setting up would mean doing of all the necessary things culminating into the attainment of the stage of ready to discharge functions. In the case of a manufacturing unit, the setting up would mean installing all the necessary machines for manufacture; and pre-setting up would mean the phase during which the place for business is acquired, machinery purchased and then finally installed so that the stage of setting up of business is attained. In the case of a trader, setting up of a business means the stage upto which the place of business is acquired and the things necessary to start trading are done. Similarly, in case of a building contractor, setting up would mean that the contractor has obtained all the necessa....
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....ity and obtained overdraft limit and also paid a security deposit of Rs. 1 crore to the NDMC. Noting that, according to the authorities below, the business would have commenced only when the BQSs are ready for providing space to the assessee for advertisement, the ITAT held that there was a basic fallacy in the appreciation of the concept of setting up of business. It was clarified that in the facts of the present case, when the assessee entered into construction contract and took the first stage of construction, it ought to have commenced its business and then it could not be said that the business was not set up till the constructions undertaken pursuant to the contract goes on. 6. Dealing with the facts of this case, it was held that ....
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....AT had no hesitation in holding that the business stood already set up in the preceding year and as such, there can be no question of canvassing a view that the business would be set up in a subsequent year when BQSs would be ready for providing space to the assessee for advertisement. 7. This Court notices that in quoting that as it did, the ITAT relied upon the two judgments of this Court - Commissioner of Income Tax v. ESPN Software India Pvt. Ltd. (2009) 184 Taxman 452 (Del); and second, Commissioner of Income Tax v. Samsung India Electronics Ltd. (2013) 356 ITR 354 (Del). The latter of these decisions was relied upon in a subsequent ruling in ITA No. 42/2014 Carefour WC&C India Private Limited v. Deputy Commissioner of Income Tax, 2....