TaxTMI 
TaxTMI 
2016 (4) TMI 735
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....he Assessing Officer to consider that the business has not commenced during the year under consideration without appreciating the facts that the assessee has received advance money from customer towards services. 2. The Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs. 13,49,875/- made by the AO on account of deduction of foreign exchange loss." 3. Briefly stated, the relevant material facts are like this. The assessee had filed return of income on 25th September, 2008, declaring interest income on deposits amounting to Rs. 58,539/- under the head "income from other sources". The stand of the assessee was that since the assessee has not commenced its business during the relevant period, computation of income under t....
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....op that he proceeded to finalise the assessment as follows :- "After verification of the submitted detail, the total income of the assessee company is determined as under :- (i) Income from other sources Rs.58,539/- (ii) Loss from Business Add: Rs.1,33,97,654/- Disallowance as discussed above Rs.13,49,875/- Net Loss from Business Rs.1,20,47,779/- 5. Income assessed u/s. 143(3) of the I.T. Act, 1961. Issue Demand Notice and Challan, Accordingly." 4. Aggrieved by the stand so taken, the assessee carried the matter in appeal before the learned CIT(A). 5. As regards the first point i.e. commencement of business, the learned CIT(A) was of the view that the commercial activities had not commenced in the relevant accounting period. On ....
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....t for the Financial Year 2008-09 clearly mentions that Financial Year 2008-09 (i.e. Assessment Year 2009-10) is the first year of operations. 4.10. The evidences adduced by the appellant in support of its claim clearly indicates that the appellant did not carry out any commercial activities in FY 2007- 08. Further, the AO has only relied upon accounting treatment to construe that the appellant commenced provision of services without any corroborative evidence in relation thereto. While AO has mentioned that the appellant has carried out operations during the year, he has not drawn reference to any supporting or corroborative evidence. There is nothing which suggests that the appellant provided services to its customers during the year unde....
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..... The evidences produced by the appellant does indicate that the facilities were not ready to commence provision of service by March 2008 or even November 2008 when the facility was inaugurated. Without the facilities being ready, services cannot be provided. Decisions of the jurisdictional High Court in case of CIT v. Sarabhai Sons P. Ltd. 90 ITR 318 (Guj) and Bombay High Court in case of CIT v. Forging & Stamping P. Ltd. 119 ITR 616 (Bom) are applicable in the present case. Without machineries being installed in the premises, the business cannot be considered to have commenced." 6. On the second point i.e. treating the loss on account of revaluation of liability, learned CIT(A) reversed the stand of the Assessing Officer and held that th....