2021 (11) TMI 376

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..... AR drew our attention to the fact that this ground i.e. against the allowing adjustment of carry forward business losses with current year income from other sources, does not emanate from the impugned order of the Ld. CIT(A). According to the Ld. AR, this must have been cut paste exercise of the department. The Ld. DR could not controvert to the submission of the Ld. AR and therefore, this Ground No. 2 of the Revenue stands dismissed. 4. Coming to the only ground remaining i.e. against the action of the Ld. CIT(A) in allowing expenses related to project of NTPC which according to the A.O. was incurred prior to setting up of the business. 5. Brief facts of the case as noted by the A.O. are that the assessee was engaged in the busines....

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....cial precedents, it is construed that since the appellant had set up office and already recruited employees for providing services to its clients the business of the appellant had already commenced. Hence, all the expenses exclusively related to the running of the business of the Company are revenue in nature and hence allowable. However, so far as NTPC awarded project is concerned, it was still in its pre operational stage. The project awarded by the NTPC had not started its business. Hence, all the expenses related to the project should have been capitalized. Appellant had capitalized only construction work but claimed other expenses as revenue expenses, which is not correct. Appellant had received 23,44,133/- as advance for executing the....

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....owed. ii) Out of the community expenses of Rs. 92,24,535/. It is observed that Rs. 79,87,741/- as per the details of community expenses(Annexure) has been spent in and around the area where the mining project was to Commence. iii) As regards cost of salaries, the same for year under consideration was Rs. 8,60,72,020/-. In this regard, when the appellant was asked to provide the details of employees working directly towards the NTPC project the appellant has produced the details of the employees and the salary paid which is around Rs. 3,22,06,253/-. Out of the total cost of Rs. 8,60,72,020/- an amount of Rs. 3,22,06,253/- requires to be capitalized and the balance needs to be allowed as revenue expenditure. 6.7 In ....