Raygada Minerals and Chemicals P.Ltd, New Delhi V. DCIT, Circle-21(1), New Delhi

ITA 1231/DEL/2018

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 8273 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 8 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2013-2014
• Appeal Filed On: 20-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHIVANI BANSAL
• Section: 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL ( Delhi Bench “F”, NEW DELHI) (Through Video Conferencing) BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER Dr. B.R.R. KUMAR , ACCOUNTANT MEMBER ITA No. 1231/Del./2018, A.Y. : 2013-14 Raygada Minerals and Chemicals P. Ltd. 12 Bhagat Singh Marg, New Delhi-110001 Vs DCIT, Circle-21(1) New Delhi (APPELLANT) (RESPONDENT) (PAN : AAFCR1212F) Revenue by : Ms. Shivani Bansal, Sr. DR Assessee by : Sh. Pramod Jain, CA Date of Hearing: 13.09.2021 Date of Pronouncement: 17.11.2021 O R D E R PER B.R.R.KUMAR, ACCOUNTANT MEMBER : This appeal has been filed by the assessee against the order of the ld. CIT(A)-7, New Delhi, dated 12.12.2017. 2 The Ld. CIT(A) confirmed the disallowance made by the AO of Rs. 39.80 Lakhs on account of employee benefit and Rs. 56.07 lakhs on account of other expenses on the grounds that the assessee has not commenced its business. The Ld. CIT(A) held that ITA No.1231/Del/2018 Raygada Minerals and Chemicals P. Ltd. 2 these expenses are in the nature of pre-operative expenses and hence, cannot be allowed. 3. We find section 3 of the Income Tax Act reads as under :- “For the purposes of this Act, “previous year” means the financial year immediately preceding the assessment year: Provided that, in the case of a business or profession newly set up, or a source of income newly coming into existence, in the said financial year, the previous year shall be the period beginning with the date of setting up of the business or profession or, as the case may be, the date on which the source of income newly comes into existence and ending with the said financial year.” 4. From the above, we find that the section deals with setting up of business. There is a difference between pre-operative expenses and pre-commencement expenditure. A company set up when the company is about to start the business and operational activities. The company may not earn revenues which may results in profits in the initial stages but it does not mean that the company has not been set up. In the instant case, the expenses of employees and other expenses claimed by the assessee are in the nature of expenses allowed u/s 37 of the Income Tax Act. Hence, the disallowance made by the AO is hereby directed to be deleted. 5. In the result, the appeal of the assessee is allowed. Order pronounced in open court on 17 th day of November, 2021. Sd/- Sd/- (AMIT SHUKLA) (Dr. B.R.R.KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER *Binita* Dated :17/11/2021 Copy forwarded to: 1.Appellant ITA No.1231/Del/2018 Raygada Minerals and Chemicals P. Ltd. 3 2.Respondent 3.CIT 4.CIT(A), New Delhi. 5.CIT(ITAT), New Delhi. AR, ITAT NEW DELHI.