TaxTMI 
TaxTMI 
2021 (6) TMI 547
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....e DRP dated 23.11.2015 u/s. 144C(5) of the Act. 2. The assessee has raised the following grounds :- "Grounds Relating to Transfer Pricing-Legal Issues 1. The learned Income Tax Officer, ward-7(1)(4), Bengaluru (hereinafter referred as "AO" for brevity), learned Additional Commissioner of Income Tax, (Transfer Pricing) 2(2), Bengaluru (hereinafter referred as "TPO" for brevity), and the Honourable Dispute Resolution Panel-2(hereinafter referred as "DRP" for brevity) ("AO", "TPO" and DRP collectively referred as "lower authorities" for brevity) have erred in passing the order which are bad in law 2. The learned AO has erred in passing the final assessment order without appreciating that he does not have jurisdiction ov....
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....ransaction Net Margin Method is to be selected as the most appropriate method, the lower authorities have erred in: a. adopting inappropriate filters in the process of selecting comparables; b. Adopting a profit level indicator of Operating profit/ Operating cost without appreciating that the operating cost consists purchases from AE; c. Considering foreign exchange gain or loss as non-operating in nature; d. Adopting companies as comparables even though they are not comparable in respect of functions performed, risks assumed, assets utilized, size, turnover, unusual business circumstances, high margins, etc., e. Rejecting K Dhandapani and Co Ltd as a comparable on unjustified ground; f.....
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....e learned AO has erred in not granting the benefit under section 35D on legal expenditure incurred for incorporation which was inadvertently not claimed in the return of income filed by the Appellant. The Appellant submits that each of the above grounds/ subgrounds are independent and without prejudice to one another. The Appellant craves leave to add, alter, vary, omit, substitute or amend the above grounds of appeal, at any time before or at, the time of hearing, of the appeal, so as to enable the Income-tax Appellate Tribunal to decide the appeal according to law. The Appellant prays accordingly." 3. Ground Nos. 1 to 9 which are related to TP issues are not pressed before us on the reason that these issues a....
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....owed as deduction u/s. 35D of the Act. This ground of the assessee is allowed. 6. Next ground is with regard to disallowance of Rs. 70,17,913 being pre-operative expenses on the reason that date on which VAT license was obtained was the date of commencement of business and not the date of incorporation. 7. The assessee was incorporated on 30.8.2010 and obtained PAN on 30.8.2010. The first board meeting of company was held on 30.8.2010. First GM was appointed on 1.9.2010. Equity capital was introduced on 15.9.2010. First Purchase Order was placed on YEC, Japan on 6.10.2010. Rent receipt from Regus Centre Services (Bangalore) Pvt. Ltd. for renting of office space at S 306, South Block, Manipal Centre, Dickenson Road, Bangalore was....
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....f continuous course of activities, for commencement of business all the activities which go to make up the business need not be started simultaneously. As soon as an activity which is the essential activity in the course of carrying on the business is started, the business must be said to have commenced. Further, he relied on the judgment of the Hon'ble Delhi High Court in the case of Carefour WC & C India (P.) Ltd., 53 taxmann.com 289 (Del) wherein it was held as follows:- "The present assessee was engaged and incorporated for carrying on trading activities in different commodities. The word 'trade' even though not defined in the Act is used to denote operations of a commercial character by which a trader provides....
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.... as to comply with the requirements of specific laws and non-obtaining of these licenses does not disentitle the assessee to claim business expenditure as deduction. 10. On the other hand, the ld. DR submitted that assessee being a trading company, it cannot import any goods without Import Code/license or cannot sell any goods without registration. These are pre-conditions to start business which are not obtained by the assessee, as such the AO disallowed the expenditure since the assessee has not set up the business. 11. We have heard both the parties and perused the material on record. In this case, the reason for not allowing expenses is that the assessee has not set up business and business was set up only from the date of obta....