TaxTMI 
TaxTMI 
2019 (11) TMI 512
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....ed its return of income on 24th September, 2008, declaring the total income at nil, after claiming losses. The Assessing Officer, during the course of assessment proceedings, observed that the assessee company has declared a business loss of Rs. 8,79,74,695/-. On verification of the Profit & Loss Account, he noted that no commercial/business activities were carried out by the assessee company during the year under consideration. The only incomes shown by the assessee during the year are as under:- i) Profit on sale of investments - Rs. 1,43,246/- ii) Interest on bank deposit - Rs. 11,58,065/- iii) Dividend income exempt u/s 10(34) - Rs. 38,51,264/- 3. He observed that the total business expenses debited by the assessee in its Pro....
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....82/- and Rs. 49,35,784/-. 4. Before the CIT(A), it was argued that the facts of the year under consideration is different from the earlier years because in the current year the business was set up since senior employees for the operations were taken on employment which includes sales head. These employees were sent on training with a view that the main purpose of the assessee company of providing technological support to food processing and dairy industry is met. It was further submitted that during the impugned assessment year, the assessee had key management personnel at its pay roll to carry out its business activities. The assessee has appointed Mr. Anuj Mehta, Senior Manager, Quality and Mr. Sanjay Sharma, National Sales Head. During....
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....kilful personnel and has covered the last mile of its preparedness which is sufficient to conclude that the assessee during the year after 07.07.2008 was fully equipped to mount the operation of business. It was on this date that Shri Sanjay Sharma, Sales head for the assessee was recruited which reflects that the assessee has started its operations. He, therefore, held that the expenses incurred after this date are for business purposes and, hence, are to be allowed. He accordingly directed the Assessing Officer to obtain the details of the expenses out of the disallowed amount of Rs. 8,66,73,393/- which pertained to the period after the setting up of the business on 07.07.2008 till 31.03.2009 and allow the same in the year under considera....
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....side and that of the Assessing Officer be restored. 8. The ld. counsel for the assessee, on the other hand, heavily relied on the order of the CIT(A). He submitted that when the assessee had appointed its sales head, it was the last recruitment. Referring to copy of the letter addressed to the Assessing Officer on 6th September, 2011, copy of which is placed at pages 106 to 109 of the paper book, the ld counsel submitted a brief chart outlining the roles and responsibilities performed by the main managerial persons being the Directors and Sr. Managers during the year under consideration as well as new persons recruited during the year were filed before the Assessing Officer. It was explained that the activities carried out by these person....
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....t the travel expenses were actually incurred for travelling made for business purposes and the business of the assessee has not yet started due to litigation. Further, the rent expenses are incurred for residence of Managing Director and Director and, hence, they are not allowable as revenue expenses in the absence of business activity as similar to that of salary expenses. We find the ld.CIT(A) held that when the assessee has appointed skilful personnel and has covered the last mile of its preparedness on 07.07.2008, therefore, the business of the assessee has been set up on 07.07.2008 and, therefore, the assessee is entitled to claim the various expenses pertaining to the period after setting up the business on 07.07.2008 till 31.03.2009.....
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....ntinuously and systematically by a person by the application of his labour and skill with a view to earn an income Section 3 defines 'previous year'. Previous means the financial year immediately preceding the assessment year. The proviso appended to this section further contemplates that in case of a business newly set up in the said financial year, the previous year shall be the period beginning with the date of set up of the business. The expression 'set up' has not been defined anywhere in the Act but it is understood in the common parlance and has been explained in a large number of decisions. According to the meaning expounded in the authoritative pronouncements, if an assessee is in a position to deliver the goods, it means that the ....