2014 (11) TMI 1144

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....e SEZ project proposed to be called "ASF Insignia". It filed its return of income declaring loss of Rs. 59,10,387/-. The AO disallowed the expenses claimed by the assessee on the ground that the assessee has not commenced its business during the relevant accounting period. 3. Before the first appellate authority the assessee submitted that it started the business of SEZ. It contended that staff were recruited, bank loans were obtained, land was purchased, development commenced and approvals for SEZ was granted by the Gazette notification dated 17th December, 2007. It further claimed that the staff recruited by the company also started promoting assessee's business and during the year the assessee signed agreement with Tata Consultancy Serv....

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....e finding of the first appellate authority, that the interest income on fixed deposits has to be set up off against the pre operative expenses, if it is held that the business of the assessee has not commenced, has not been challenged by the revenue. 6.2. Be it as it may, in the case on hand, the expenses incurred, which have been disallowed by the AO, are in the nature of revenue expenses i.e. business promotion, office maintenance, travelling, salaries etc. The AO was of the view that the assessee has not brought any evidence that it has been carrying on systematic and continuous business activity. The assessee on the other hand submits that it has purchased land, commenced development and has also obtained the required permissions / app....