TaxTMI 
TaxTMI 
2022 (2) TMI 1084
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....sed the following grounds of appeal: 1. The order of the commissioner of Income Tax (Appeals) enhancing the assessment is wrong, illegal, unjust, arbitrary and is liable to set aside. 2.1 The Commissioner of Income Tax (Appeals) erred in enhancing the income of the Appellant by disallowing the genuine business expenditures incurred by the Appellant. 2.2 The Commissioner of Income Tax (Appeals) erred in proceeding on the basis that the business had not yet commenced; which is untenable. 3.1 The Commissioner of Income Tax (Appeals) erred in disallowing the preliminary expenses of Rs. 2,04,986/-. 3.2 The Commissioner of Income Tax (Appeals) erred in considering Administrative expenses debited in the....
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....terest paid after netting of interest received during the construction period under the head ``work in progress" and as such, the order of the Assessing Officer is erroneous. 6.3. The Commissioner of Income Tax (Appeals) ought to have appreciated that the Interest earned on the Deposits is "inextricably linked" with the setting up of the business and therefore is capital receipt, not taxable. 6.4. In any event the Commissioner of Income Tax (Appeals) ought to have set off the interest received with the interest paid, even under the head other sources. 7. Any other ground that maybe raised at the time of hearing." 3. The brief facts of the case are that the assessee is engaged in the business of real estate, con....
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....r planning permit with CMDA on 15.11.2011 and hence, the business has been set up and commenced. The ld. Counsel for the assessee also reiterated that until the planning permission is sanctioned no construction activity can be commenced. The first step in the commencement of business is to apply for the planning permit with respective authorities. 7. Countering the arguments, the Ld. DR argued that except for the application to CMDA for the planning permit there are no activities carried out by the assessee showing commencement of business. Hence, the expenditure incurred before the commencement of business cannot be treated as pre-operative expenses and capitalized with the project cost. The Ld. DR also argued that the interest n the fi....
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....s, as is defined in the Oxford English Dictionary, to place on foot or to establish, and in contradiction to commence. The distinction is this that when a business is established and is ready to commence business then it can be said of that business that it is set up. But before it is ready to commence business it is not set up. But there may be an interregnum, there may be an interval between a business which is set up and a business which is commenced and all expenses incurred after the setting up of the business and before the commencement of the business, all expenses during the interregnum, would be permissible deductions under sec.10(2)." 9. We find from the records that the assessee has purchased lands vide documents no. 5158 & 51....
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....f land as well as joint development agreement entered into by the assessee, these expenditure are directly relatable to capital acquisition and are liable to be capitalized along with the cost of acquisition of the property. Accordingly, as a combined expenditure Rs..11,00,000/- (Rs. 7,50,000 + Rs..3,50,000) are not liable to be claimed as expenditure to set up the business of the assessee and are not allowable for deduction u/s. 35D of the Act and confirmed the disallowance made by the AO. 10.1 It is an admitted fact that the assessee has incurred legal and professional charges directly attributable to the acquisition of land as the assessee has entered into joint development agreement, we are of the opinion that the authorities below h....
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....1 We have considered the rival contentions. Admittedly, the assessee is engaged in the construction, development & Marketing of residential and commercial flats. The contention of the ld. Counsel for the assessee is that prior to its business operation, the assessee has temporarily parked its funds in short term deposits and earned interest income, which were capitalized and are inextricably linked with the assessee's business as the entire funds were utilized only for business purposes. We find force in the arguments of the ld. Counsel. On perusal of the material available before us, decision of the Hon'ble Supreme Court in the case of M/s. Tuticorin Alkali Chemicals and Fertilizers Ltd (supra) is not applicable for the case of the assesse....