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| The Tax Publishers2019 TaxPub(DT) 7170 (Del-Trib) INCOME TAX ACT, 1961
Section 37(1)
It is a fact that due to slow down in information technology sector globally assessee company decided to postpone commencement of its software development activities, thus, leading to a conclusion that though business was set up, business activities had not been commenced. Also, relevant bills and vouchers for the expenses had not been produced before AO in order to prove genuineness and allowability of the expenses. Thus, expenditure incurred before commencement of business had been rightly disallowed by AO.
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Business expenditure - Allowability - Expenditure incurred before commencement of business -
Assessee-company claimed deduction of expenditure incurred on account of salaries, recruitment and relocation, rent, travelling and conveyance, legal and professional charges and common services. AO disallowed deduction on the ground that expenses had been incurred before commencement of business. Held: It is a fact that due to slow down in information technology sector globally, assessee company decided to postpone commencement of its software development activities, thus, leading to a conclusion that though business was set up, business activities had not been commenced. Also, relevant bills and vouchers for the expenses had not been produced before AO in order to prove genuineness and allowability of the expenses. Thus, expenditure incurred before commencement of business had been rightly disallowed by AO.
Relied:Swadeshi Cotton Mills (1967) 63 ITR 57 (SC) : 1967 TaxPub(DT) 191 (SC) and ALD Automotives (P.) Ltd. (2018) 91 Taxmann.com 475 (Bom) : 2018 TaxPub(DT) 1214 (Bom-HC)
REFERRED : Akzo Nobel Car Refinishes India (P) Ltd. v. Dy. CIT (2008) 25 SOT 226 (Del-Trib) : 2008 TaxPub(DT) 2206 (Del-Trib).
FAVOUR : Against the assessee.
A.Y. :
INCOME TAX ACT, 1961
Section 271(1)(c)
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