TaxTMI 
TaxTMI 
TaxTMI 
2020 (9) TMI 452
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....ciating the Assessing Officer's findings that the business of the assessee was not yet set-up in the year in reference, further, provisions of section 35D specify that any expenditure before the commencement of the business must be amortized and there is nothing shown by the assessee that the business has commenced, therefore, the Assessing Officer disallowed the expenditure accordingly." 2. "Whether on facts and in the circumstances of the case and in Law, the Ld.CIT(A) erred in deleting the addition of Rs. 1,30,21,000/- in respect of money received from Foram Dattani Kapoor, without appreciating the fact that assessee had not filed signed confirmation from the share applicant during the scrutiny proceedings and the assessee failed to discharge its onus to establish the genuineness of the identity of the parties and the creditworthiness of the parties from whom the assessee received money. " 3. The brief facts of the case are that the assesse company is engaged in the business of manufacturing of Emission technology applications and accessories. The company is also engaged in the business of using the technology to produce stable fuel emulsion using a system additive and of....
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....f the business. Since, the business of the assesee has not yet commenced, the relevant expenditure debited into the profit and loss account needs to be treated as pre-operative or preliminary expenses and shall be amortized, as per the provisions of section 35D of the I.T.Act, 1961. 5. The Ld. AR for the assesee, on the other hand strongly supporting order of the Ld.CIT(A) submitted that the assessee has commenced its business activities, which is evident from the fact that it has set-up its plant and machinery for production of finished goods and has also, purchased raw material, which is evident from the fact that during the year under consideration, it has shown raw material consumption of Rs. 14,09,071/- and also, incurred various manufacturing and other administrative expenses. The Ld. AR for the assessee, further submitted that the assessee has already commenced its business activities and has started manufacturing its specialized machinery, which is used in reduction of emission. The assesee has also, installed its machinery in clients place and earned revenue from its business, for which necessary evidences, including agreement between the parties and bills raised to the c....
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....y, necessary expenditure incurred for the purpose of business needs to be allowed s deduction, whether or not any revenue is generated for the year under consideration. The Ld.CIT(A) after considering relevant facts has recorded categorical findings that the assesse business has been set-up and has commenced its activities and accordingly, all expenditure incurred for the purpose of business needs to be allowed. Facts remains unchanged. The revenue has fails to bring on record any evidences to prove that the findings of facts recorded by the Ld.CIT(A) is incorrect. On the other hand, the assessee has filed necessary evidences to prove that it has commenced its business activity and has generated income from business operations. Therefore, we are of the considered view that the Ld.CIT(A) was right in deleting additions made towards disallowances of expenditure and hence, we are inclined to uphold the findings of Ld.CIT(A) and reject ground taken by the revenue. 7. The next issue that came up for our consideration from ground No. 2 of revenue appeal and ground No.1 of cross objection filed by the assesse is addition of Rs. 1,47,75,000/- towards share application money received from ....
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....Ld. AR, further submitted that although, the Ld.CIT(A) has accepted the transactions between the assesee and Shri Foram Dattani Kapoor is genuine, but failed to appreciate the other transactions with Global Emission Management Pvt.Ltd. even though, the assesee has filed various details, including signed confirmation from the creditor. 10. We have heard both the parties, perused the material available on record and gone through orders of the authorities below. It is an admitted fact that the share application money has been received from closely held companies and related parties of the assesee. It is also, not in dispute that one of the creditor Shri Foram Dattani Kapoor has responded to notice issued u/s 133(6) of the I.T.Act, 1961 and filed all evidences called for by the Ld. AO, including confirmation letter for having paid share application money to the assessee along with bank statements, financial statements for the year and income tax return filed acknowledgment. Insofar as, Global Emission Management Pvt.Ltd, although notice issued u/s 133(6) was returned unserved, but fact remains that the assesse has subsequently filed signed confirmation letter from the party along with....