TaxTMI 
TaxTMI 
2023 (3) TMI 1343
X X X X Extracts X X X X
X X X X Extracts X X X X
....ess or renting of project has been set up, not appreciating that business of renting could not be setup unless the building is complete? 2. Whether the Ld. CIT(A) has erred in ignoring the law in deciding the issue of setting up and not considering the decision of Hon'ble Bombay High Court in case of Piem Hotel Pvt. Ltd. 209 ITR 0616; in which in similar circumstances it was held that in hotel business, business is not setup till hotel building is fit for renting? 3. Whether the CIT(A) not appreciated the fact that the assessee is far from commencement of business, in which circumstances the IT AT, Mumbai has in case of Shaporji Pallonji Power Co. Ltd. vs ITO 28 DTR 2012 held that business cannot be said to be setup. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 4. Aggrieved with the finding of the Ld. CIT(A), the revenue is in appeal before us by way of raising the grounds as reproduced above. 5. We have heard rival submission of the parties and perused the relevant material on record. We find that the issue in dispute in the case is whether the business of the assessee of Developing "Real Estate Park" was set up in the year under consideration/in prior year or not. The Learned CIT(A) has relied on the findings of his predecessor for A.Y. 2012-13. The relevant findings of the Learned CIT(A) is reproduced above :- 6.1 I have considered the assessment order and submissions placed on record by the appellant during the appellate proceeding. Facts of the case and issues raised in the gro....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ing up of business cannot be disputed. 6.8 I have carefully looked into the legal and factual aspects of the case. The stand of the AO that in absence of any business income, project being incomplete, general expense are disallowable is contrary to well settled legal principles. It is the setting up of business which is relevant for allowing expenses and not the actual commencement of business. The business of the appellant is to earn rental income from commercial mall and construction of mall is essential for that. I find that construction was in full swing which is evident by the fact that capital work in progress as on 31/03/2011 was Rs. 181.92 crores and as on 31/03/2012 at Rs.204.04 crores. A marketing centre has been set up t....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Indian Income-tax Act, 1922, then explained the distinction between the concepts of 'commencement1 and 'setting up' of a business : ". . . It seems to us, that the expression 'setting up' means, as is defined in the Oxford English Dictionary, 'to place on foot' or 'to establish', and in contradistinction to 'commence'. The distinction is 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 setti....
X X X X Extracts X X X X
X X X X Extracts X X X X
....owable as business expenditure, as has also been held by another judgment of Jurisdictional High Court in the case of CIT vs. Dhoomketu Builders & Development Pvt. Ltd. 216 Taxmann 76. 6.14 As discussed above, there remains no doubt that the appellant's business was set up and the year under assessment falls in the interval between the setting up of business and commencement of business and following the principles established by above discussed judicial decisions on the issue, I am of the view that in the facts and circumstances of the case, AO's order disallowing expenditure of Rs. 1,00,17,151/- claimed as revenue expenditure and capitalizing the same to CWIP is not justified. The said expenditure is held to be allowable ....