TaxTMI 
TaxTMI 
2017 (4) TMI 1591
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....hat the business can be considered to be set up when the primary activity i.e. acquisition of land takes place and the subsequent business expenditure incurred from thereon is to be allowed as revenue expenditure? 3. Whether on the facts and in the circumstances of the case, the Tribunal was justified and correct in law in holding that interest income earned could not be set off against the business expenditure incurred by the Appellant under the Act?" 2. The matter was listed for admission and notice issued to Sri T.Ravikumar to make his submissions on behalf of the Revenue. 3. By consent of the parties, the matter is taken up for final disposal at the stage of admission. The Appellant is a Company that was incorporated on 3rd November 2012 with several objects inter alia marketing, consultancy, developing, managing and maintaining information technology parks, industrial parks and other projects. The first return of income was filed in terms of the provisions of the Income Tax Act 1961 (in short 'Act') for financial year 2003-04 relevant to assessment year 2004-05 on 25.10.2004 returning business loss of an amount of Rs.5,09,914/-. The return was accepted a....
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....with supporting grounds. The additional questions sought to be raised are as follows: 1.Whether under the facts and circumstances of the case, the Income Tax Appellate Tribunal was right in holding that the Appellant has not set up or commenced the business and accordingly expenditure incurred are not allowable as business expenditure? 2.Whether under the facts and circumstances of the case, the Income Tax Appellate Tribunal was right in upholding the order of the Commissioner of Income Tax (Appeals) denying the set off of the loss of the appellant in its business against the interest income, as claimed by the appellant? 3. Whether based on material available before it the Tribunal could have come to the conclusion that the appellant did not set up the business? 4. Whether under the facts and circumstances of the case, the Income Tax Appellate Tribunal was right in holding that the business loss cannot be allowed to be set off against the interest income, since the appellant has not commenced business, while the requirement for computation of business income is only on the profits after the set up of the business? 5. Whether under the fa....
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....e to note the sequence of events that have transpired in the present case, it is more than apparent that the Assessee never intended to question the assumption of jurisdiction under Section 147 at any stage from the time of assessment or even thereafter. It is only at the stage of admission of the Tax Case (Appeal) that the issue was raised, even then, as an additional issue. When, from December 2008 the Assessee has accepted and was quite content with the jurisdiction assumed under Section 147, we do not think it fit to permit the Assessee to raise the question now, merely for the asking. 15. The provisions of Section 260 A read with the proviso thereto, no doubt empower the Court to consider any question, even one not raised before it, upon the Court recording its satisfaction that the case 'involves' such an issue. The use of the word 'involves' does not in our view extend to all and every legal issue arising in a case, but only those that the assessee demonstrates, has been contested by it at a stage proximate to the raising of the said issue by the department. Acceptance of jurisdiction without demur at every single stage of the proceeding, assessment and appeals, h....
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.... assessment 2004-05 was still available, being 31.03.2009. The return, indicating the stand of the assessee duly supported by the Directors Report and financials were very much on record, in spite of which the department, for reasons best known to it, chose to allow the same to lie undisturbed. This cannot be looked at as mere inadvertence or over-sight. The assesee has been assessed in the same charge for assessment years 2004-05 and 2005-06 and the issue of intimation under section 143(1) is by the same officer. The Directors Report and the financials in respect of assessment year 2005-06 reveal that the following activities were carried out by the company for the period 01.04.2004-31.03.2005. Performance of the Company The Board of AITPCL had, in March 2004, approved the development of phase 1 of the project amounting to 525,000 sq.ft. of Hi-TEch & IT office space. The construction commenced in April 2004 and is slated to be completed for occupation by June 2005. The completion is delayed by about 6 weeks due to cash flow problems faced by the contractor, Tiong Seng Contractors Private Limited. They are expected to complete the project by end June. The quality ....
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....nto existence', as being the initial stage in the chain of events leading to full-fledged business operations. If one were to examine the nature of activities engaged in Financial Year 2003-04 and 2004-05, it seems apparent that the project was at an advanced stage. 22. Useful reference can be made to section 35D(1) of the Act that deals with the amortisation of preliminary expenses. The term 'preliminary expenses' as used in section 35-D and seen in the context of the phrase 'commencement of business', used therein, refers to expenditure incurred prior to such commencement. The term 'preliminary expenses' has been explained in section 35D(2) to mean such expenditure incurred in the preparation of feasibility report, project report, conduct of market survey, engineering services, legal charges for drafting of agreements or drafting of memorandum of articles of association and printing of the same, fees paid to the Registrar of Companies for issue of shares or debentures and other prescribed items of expenditure. Thus, preliminary expenditure constitutes those expenses incurred at a very nascent stage of activity. The terms 'preliminary' by its....