2007 (4) TMI 53

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....ase are that M/s. Relaxo Footwears Ltd. (for short "the assessee") is a company engaged in trading of all kinds of rubber footwears and in the year under consideration, the assessee had commenced the business of manufacture and sale of hawai chappals at its factory at Bahadurgarh. The assessee filed the return of income on November 30, 1995, disclosing total income of Rs. 1,50,98,660 and the same was processed under section 143(1)(a) of the Act. During the course of the assessment proceedings, the Assessing Officer noticed that the assessee has claimed pre-operative expenses of Rs. 41,24,841 in the computation of total income in respect of the expenses incurred on a new factory and has also claimed capital issue expenses of Rs. 2,63,588. Th....

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....tension of old business. This aspect was considered by this court in CIT v. Modi Industries Ltd. (No. 3) [1993 200 ITR 341. In that case the assessee-company, which manufactured various commodities like sugar, vanaspati, soaps, paints and varnish, torch and lantern, started manufacturing a new commodity, viz., special alloy wire and billets. Debentures were issued for raising funds for this new steel unit and the assessee incurred expenditure for the issue of debentures. The question was whether the expenditure incurred by the assessee in the year in which the unit, had not started working was allowable as business expenditure. The Appellate Tribunal found that the management of the new unit and the earlier business were the same and there ....