TaxTMI 
TaxTMI 
TaxTMI 
2022 (9) TMI 491
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.... was not in a position to procure business and deliver its services of studio in the year under consideration. 3. That on facts and in law the CIT(A) erred in upholding disallowance of Rs 52,25,161/-- claimed by the Assessee as an allowable business expenditure in the year under consideration. 4. That without prejudice, on facts and in law the CIT(A) erred in not directing the AO to capitalize the expenditure of Rs 52,25,161/- and allow benefit of depreciation ?allowance on same.". 3. Brief facts of the case are that the return of income filed declaring income of Rs. 21,03,02,529/- which was processed u/s 143(1) of the Act, subsequently, selected for scrutiny and notices were issued. The assessment proceedings have been initiated against the assessee and the assessee has participated through its representative. The assessment order came to be passed on 17/12/2012 against the assessee by disallowing the claim of Rs. 52,25,161/- made by the assessee as business expenditure. 4. Aggrieved by the assessment order dated 17/12/2012, the assessee has preferred an Appeal before the CIT(A). The Ld.CIT (A) vide order dated 29/01/2014 dismissed the Appeal of the assessee by confirming th....
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.... present case, the Assessee, for the purpose of setting up the studio on the commercial property got signed the Letter of Intent (LOI)on 04-04-2008 from Indiabulls Properties Pvt. Ltd. From the clause (2) of Letter to Intent (LOI) dated 04.04.2008 between Indiabulls Properties Pvt. Ltd. and New Delhi Television ltd, read with Letter of Novation (LON) dated 11.12.2008 transferring all the rights and liabilities of N'DTV related to LOI to NDTV Studios Ltd., It can be seen that the 7th and 8th floor of Tower 1 of One of Indiabulls Centre was to be handed over by the licensor i.e. Indiabulls to licensee i.e. the Assessee for fit out works on or before 01.05.2008 or the actual date of handover for fit out. The said date is specified as 'fit out commencement date'. Clause 2.1 also says that the building in which the premise is situated is under construction. Fit out period was for 5 months from 'fit out commencement date'. The cl, 2.3 & 2.4 LOI also says that 'License Commencement Date' shall be from the date of occupancy and license fee, car parking fee, maintenance fee shall be paid from the date of occupancy. From the balance sheet it is evident the fit out works, building of stud....
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....s but on the strength of them, it would be suffice to say that word "business" has a wide import and it means an activity carried on continuously and systematically by a person by the application of his labour and skill with a view to earn an income. Section 13 of the Income-tax Act, 1961 defines "previous year". Previous year means the financial year immediately preceding the assessment year. The proviso appended to this section further contemplates that in case of a business newly set up in the said financial year the previous year shall be the period beginning with the date of setting up of the business. The expression "set up" has not been defined anywhere in the Act. But as it is understood in the common parlance and considered by the 1TAT in Hindustan Diamond Co. (P.) Ltd. 's case (supra), if an assessee is in a position to deliver the goods means that business is set up. Actual delivery is immaterial. For example if a person wants to carry on the business of transportation the moment he has purchased the vehicle for transporting the goods and arranged the space, then it would indicate that business has been set up, it is immaterial whether he actually transported goods or no....
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.... 14. The Coordinate bench in the case of Delhi in ITO v. Omni Globe Information IT A No.3465/Del/09 have also considered the similar issue as under: '4.7 When we look to the facts of our case, it is clear that although the staff had been recruited, it was not ready for rendering services as the staff had to be trained with the systems. The assessee had not taken premises on rent and, therefore, installation of computer therein had not been done. Therefore, the assessee was not in a position to solicit customer till the end of May, 2004. The advances were received from the parent company but these were used for training the personnel and paying salaries and incidental charges, necessary for setting up the business. Thus, in a nutshell, it is held that a business is set up when it reaches a stage where it is in a position to procure business and not before. However, the expenditure becomes deductible from such stage irrespective of the date of actual receipt of the business. Therefore, it is held that the business had not been set up till the end of May, 2004. Accordingly, the assessee is not entitled to deduction of these expenses. It is held accordingly." The above decisions ar....