1998 (10) TMI 540

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....nd in the circumstances of the case, the Tribunal was correct in law in holding that there is only one line of business, namely, construction business with branch at Kuwait and that the management and control is undoubtedly common ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in setting aside the order made under section 263 of Income-tax Act ?" The assessee is a limited company. It is carrying on business as contractors. The assessee has business in India as also in Kuwait. For the assessment year 1984-85, the assessee filed a return declaring income of Rs. 10,97,626 and claiming brought forward losses to the tune of Rs. 8,61,53,374. The assessee had claimed expenditure of Rs. ....

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.... no details or justification was furnished for the alleged expenses to the tune of Rs. 6,69,216 incurred in Kuwait. The Assessing Officer was directed to disallow the deduction. The order of the Commissioner of Income-tax was challenged by the assessee in appeal before the Income-tax Appellate Tribunal which arrived at the following findings, inter alia : "The assessee's case is that the business of construction carried on in India and in Kuwait is a composite business and the construction business has not been closed down. There may not be any construction activity at Kuwait yet the business of the assessee is a running business inasmuch as the construction business in India is continuing. In the case of B. R. Ltd. v. V. P. Gup....

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....sel for the Revenue has submitted that to be entitled to deduction of an expenditure by reference to section 37 of the Act the assessee must show amongst others that the business in respect of which expenses were claimed was continuing and the expenses of one business cannot be set off against the income of another business. Learned counsel for the assessee has submitted that the business was one and it was continuing ; merely because construction activity at one place had come to an end while it was continuing at another place, the business cannot be said to have come to an end. The submission of learned counsel for the Revenue is based on an assumption that the business at Kuwait and the business at India were two separate businesses n....