Tata Bluescope Steel Ltd., Pune V. ACIT Circle 1(1), Pune, Pune

ITA 1437/PUN/2009

• Counselvise Citation: 143724514 RSA 2009
• Duration Of Justice: 4 year(s) 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-03-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 19-02-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 15-12-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S P WALIMBE
• Keywords: Depreciation; Assessment record; Revenue expenditure
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHE B, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO.1437/PN/2009 (ASSESSMENT YEAR : 2005-06) TATA BLUESCOPE STEEL LTD., THE METROPOLITAN, 4 TH FLOOR, FINAL PLOT NO.27, WAKDEWADI, SHIVAJINAGAR, PUNE 411 005. PAN : AACCB5628E . APPELLANT VS. ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 1(1), PUNE. . RESPONDENT ASSESSEE BY : MR. ABHAY AVCHAT DEPARTMENT BY : MR. S. P. WALIMBE DATE OF HEARING : 10-02-2014 DATE OF PRONOUNCEMENT : 20-03-2014 ORDER PER G. S. PANNU, AM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST AN ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-I, PUNE DATED 18.08.2009 WHICH, IN TURN, HAS ARISEN FROM AN ORDER DATED 20.12.2007 PAS SED BY THE ASSESSING OFFICER U/S 143(3) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT), PERTAINING TO THE ASSESSMENT YEAR 2005-06. 2. IN THIS APPEAL, THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE READ AS UNDER : - 1. THE LEARNED ASSISTANT COMMISSIONER OF INCOME TA X OFFICER, CIRCLE 1 (1), PUNE, HAS ERRED IN DISALLOWING AND THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)- I, PUNE HAS ERRED IN CONFIRMI NG DISALLOWANCE OF DEPRECIATION OF RS.4,15,209/- UNDER THE PRETEXT THA T FIXED ASSETS WERE NOT USED FOR THE FINANCIAL YEAR 2004-2005. 2. WITHOUT CONSIDERING THE NATURE OF ACTIVITIES DUR ING THE YEAR THE LEARNED ASSISTANT COMMISSIONER OF INCOME TAX OFFICER, CIRCL E 1 (1), PUNE, HAS ERRED IN DISALLOWING AND THE LEARNED COMMISSIONER O F INCOME TAX (APPEALS) - I, PUNE HAS ERRED IN CONFIRMING THE DIS ALLOWANCES OF ALL THE REVENUE EXPENSES CLAIMED AS DEDUCTION AMOUNTING TO RS.5,91,977/-. ITA NO.1437/PN/2009 A.Y. : 2005-06 3. WITHOUT CONSIDERING THE FACT THAT THE ASSESSEE C OMPANY HAS RETURNED LOSS OF RS.10,07,186/- COMPRISING OF EXPENSES OF RS .5,91,977/- AND DEPRECIATION OF RS.4,15,209/- THE LEARNED ASSISTANT COMMISSIONER OF INCOME TAX OFFICER, CIRCLE 1 (1), PUNE, HAS ERRED I N CONSIDERING CLAIM FOR EXPENSES OF RS.43,46,032/- BY IGNORING THE DISA LLOWANCES UNDER SECTION 40(A)(IA) OF RS.36,37,148/- CONSIDERED BY T HE COMPANY ITSELF AND THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) - I, PUNE HAS ERRED IN CONFIRMING THE DISALLOWANCES OF THE SAME. 3. THE APPELLANT BEFORE US IS A COMPANY INCORPORATE D UNDER THE PROVISIONS OF THE COMPANIES ACT, 1956 ON 09.02.2005 AND HAS BE EN PROMOTED BY BLUESCOPE STEEL LTD., AUSTRALIA THROUGH ITS SUBSIDI ARY, NAMELY, BLUESCOPE STEEL ASIA HOLDING PVT. LTD. AUSTRALIA. AT THE TIM E OF INCORPORATION, THE NAME OF THE COMPANY WAS BLUESCOPE STEEL BUILDING SOLUTIO NS PVT. LTD. AND IT HAS BEEN SUBSEQUENTLY CHANGED TO TATA BLUESCOPE LTD. AF TER THE JOINT VENTURE WITH TATA STEEL LIMITED. 4. THE PRIMARY OBJECTS OF THE ASSESSEE ARE STATED T O BE PROVIDING SERVICES AND SOLUTIONS TO BUILDING AND CONSTRUCTION INDUSTRY , MANUFACTURING HOT DIP METALLIC INCLUDING ZINC/ALUMINUM COATED STEEL AND S ELLING AND MARKETING OF SUCH METAL COATED STEEL AND MANUFACTURING AND SELLI NG OF VARIOUS PRODUCTS MADE FROM COATED STEEL FOR USE IN BUILDING AND CONS TRUCTION INDUSTRY. FOR THE ASSESSMENT YEAR UNDER CONSIDERATION, ASSESSEE FILED A RETURN OF INCOME DECLARING A LOSS OF RS.10,07,186/- WHEREAS THE ASSE SSMENT HAS BEEN COMPLETED BY THE ASSESSING OFFICER AT NIL INCOME, WHICH HAS SINCE BEEN AFFIRMED BY THE CIT(A). ACCORDINGLY, THE ASSESSEE IS IN APPEAL BEFORE US RAISING THE AFORESTATED THREE GROUNDS OF APPEAL. 5. IN SUM AND SUBSTANCE, THE PERTINENT DISPUTE UNDE RLINING THE AFORESTATED GROUNDS OF APPEAL PERTAINS TO THE ASSERTION OF THE ASSESSEE THAT IT HAS COMMENCED ITS BUSINESS DURING THE YEAR UNDER CONSID ERATION AND THEREFORE THE EXPENDITURE AND THE DEPRECIATION CLAIMED BY THE ASSESSEE SHOULD BE CONSIDERED WHILE ASSESSING THE TOTAL INCOME. THE A SSESSING OFFICER AS WELL AS THE CIT(A) HAVE CONCLUDED THAT ASSESSEE HAS FAILED IN ESTABLISHING EITHER ITA NO.1437/PN/2009 A.Y. : 2005-06 SETTING-UP OF ITS BUSINESS OR THE COMMENCEMENT OF I TS BUSINESS DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION AND ACCORDINGLY THE EXPENSES AS WELL AS THE DEPRECIATIO N CLAIMED HAS BEEN DISALLOWED. 6. IN THE AFORESAID BACKGROUND, THE LEARNED COUNSEL FOR THE ASSESSEE, AT THE TIME OF HEARING, SUBMITTED THAT THE ASSESSEE WA S ALSO INTER-ALIA ENGAGED IN THE BUSINESS OF PROVIDING PRE-FABRICATED BUILDING S OLUTIONS WHICH WAS A NEW CONCEPT IN INDIA AND IT REQUIRED ENLIGHTENING THE C ONSUMERS ABOUT PRE- FABRICATED BUILDING SOLUTIONS. THE LEARNED COUNSEL SUBMITTED THAT SUCH ACTIVITY WAS COMMENCED DURING THE YEAR UNDER CONSIDERATION T HOUGH NO PARTICULAR ORDERS WERE RECEIVED AND NO INCOME WAS EARNED THERE OF. IT WAS SOUGHT TO BE MADE OUT THAT EARNING OF INCOME IS NOT THE RELEVANT CRITERIA TO SAY THAT THE BUSINESS HAS COMMENCED AND THAT IT WOULD BE SUFFICI ENT IF THE ACTIVITIES OF THE BUSINESS HAS BEEN CARRIED OUT. IN THE COURSE OF HE ARING, RELIANCE HAS BEEN PLACED ON THE DECISION OF THE PUNE BENCH OF THE TRI BUNAL IN THE CASE OF STYLER INDIA (P) LTD. VS. JCIT, (2008) 113 ITD 55 (PUNE). 7. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPR ESENTATIVE HAS RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW IN SUPPORT OF THE CASE OF THE REVENUE. IN PARTICULAR THE LEARNED DEPARTMENTAL REPRESENTATI VE REFERRED TO THE DISCUSSION MADE BY THE CIT(A) IN PARAS 4.3.2 TO 4.4 .5 TO POINT OUT THAT FACTUALLY THE CIT(A) HAS CONCLUDED THAT ASSESSEE HAS NEITHER SET-UP AND NOR COMMENCED ITS BUSINESS DURING THE YEAR UNDER CONSID ERATION. ON THAT BASIS, THE CASE MADE OUT BY THE ASSESSEE IS SOUGHT TO BE A SSAILED AND THE ORDERS OF THE AUTHORITIES BELOW ARE DEFENDED. 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. ADMITTEDLY, THE ASSESSEE COMPANY HAS BEEN INCORPORATED DURING THE P REVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION I.E. ON 09. 02.2005. AS PER THE ITA NO.1437/PN/2009 A.Y. : 2005-06 MEMORANDUM OF ASSOCIATION OF ASSESSEE COMPANY, A CO PY OF WHICH HAS BEEN PLACED AT PAGES 14-23 OF THE PAPER BOOK, IT IS EVID ENT FROM THE MAIN OBJECTS ARE TO CARRY ON THE BUSINESS PROVIDING SERVICES AND SOLUTIONS TO THE BUILDING AND CONSTRUCTION INDUSTRY LIKE DESIGNING, FABRICATI ON, INSTALLATION, SUPERVISION AND PROJECT MANAGEMENT IN RELATION TO THE USE OF TH E PRODUCTS MANUFACTURED INCLUDING SOLUTIONS RELATING TO ROOFING AND WALLING SYSTEMS, PRE-ENGINEERING BUILDING SOLUTIONS, ETC. . ANOTHER MAIN OBJECT IS TO CARRY ON THE BUSINESS O F HOT DIP METALLIC INCLUDING ZINC/ALUMINUM COATED STEEL A ND SELLING SUCH METAL COATED STEEL AS SUCH OR ALONG WITH ORGANIC COLOUR C OATED METAL SHEET. THE LINE OF BUSINESSES ALSO INCLUDE CARRYING ON THE BUSINESS OF MANUFACTURING AND SELLING VARIOUS PRODUCTS FOR USE IN BUILDING AND CO NSTRUCTION MADE FROM COATED STEEL, WATER-PROOFING ACCESSORIES, MANUFACTURING PR E-ENGINEERING BUILDINGS, ETC. 9. IN NUTSHELL, WE ARE ONLY TRYING TO POINT OUT T HAT OUT OF A HOST OF OBJECTIVES, ASSESSEE HAS MERELY CLAIMED THAT IT HAS COMMENCED BUSINESS OF PROVIDING SERVICES DURING THE YEAR UNDER CONSIDERAT ION. THERE IS NO DISPUTE THAT ASSESSEE COMPANY HAS NOT COMMENCED ANY MANUFAC TURE OR PRODUCTION OF ARTICLES OR PRODUCTS DURING THE YEAR UNDER CONSIDER ATION FOR USE IN BUILDING AND CONSTRUCTION INDUSTRY. THEREFORE, CLAIM OF THE ASS ESSEE OF HAVING SET-UP OR COMMENCED ITS BUSINESS DURING THE YEAR UNDER CONSID ERATION, IS TO BE EXAMINED IN THE CONTEXT OF THE ASSESSEES STATED OB JECTIVE OF HAVING COMMENCED BUSINESS OF PROVIDING SERVICES DURING THE YEAR. ON THIS ASPECT, THE PLEA OF THE ASSESSEE IS THAT SINCE PROVIDING PR E-FABRICATED BUILDING SOLUTIONS IS A NEW CONCEPT IN INDIAN MARKET IT REQU IRED EDUCATING THE CUSTOMERS ABOUT PRE-FABRICATED BUILDING SOLUTIONS A ND FOR THIS PURPOSE IT HAS STARTED INCURRING EXPENSES DURING THE YEAR UNDER CO NSIDERATION. IT HAS ALSO BEEN ASSERTED THAT THE EFFORTS MADE IN THIS REGARD DURING THE YEAR UNDER CONSIDERATION HAVE ACTUALLY FRUCTIFIED IN THE SUBSE QUENT YEAR AND ASSESSEE HAS EARNED INCOME ON THIS COUNT IN THE SUBSEQUENT Y EAR. IT HAS ALSO BEEN ITA NO.1437/PN/2009 A.Y. : 2005-06 STATED THAT DURING THE YEAR, ASSESSEE HAD PURCHASED COMPUTERS, OBTAINED OFFICE ACCOMMODATION ON LEASE AND EMPLOYED MANPOWER SUPPORT SERVICES, ETC. IT HAS ALSO BEEN POINTED OUT THAT IT HAS PAID ADMINISTRATIVE SERVICE CHARGES TO ONE OF ITS SISTER CONCERN TO ENJOY ADMINISTRATIV E SUPPORT. THEREFORE, IT IS SOUGHT TO BE MADE THAT THE SAID ACTIVITY OF PROVIDI NG CONSULTANCY SERVICES BEING ONE OF THE STATED LINES OF BUSINESS, WAS SET- UP AND COMMENCED DURING THE YEAR UNDER CONSIDERATION. 10. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS PU T-FORTH BY THE ASSESSEE AS ALSO THE ORDERS OF THE AUTHORITIES BELO W IN THIS REGARD. FACTUALLY, SPEAKING, IN OUR VIEW, THE ASSESSEE HAS TO FAIL IN ITS ASSERTION THAT IT HAD SET-UP OR COMMENCED THE BUSINESS DURING THE YEAR UNDER CON SIDERATION. WE SAY SO FOR THE REASONS REFERRED HEREINAFTER. FIRSTLY, IT IS NOTICED THAT THE CIT(A) SPECIFICALLY REQUIRED THE ASSESSEE TO FURNISH EVIDE NCE IN SUPPORT OF ITS CLAIM THAT IT HAD STARTED CONTACTING PROSPECTIVE CUSTOMER S FOR ADVISING ABOUT THE PRE- FABRICATED BUILDING SOLUTIONS. THE CIT(A) RECORDS THAT IN RESPONSE ASSESSEE DID NOT PRODUCE ANY MATERIAL OR CORRESPONDENCE TO S HOW ANY COMMUNICATION WITH ANY PROSPECTIVE CUSTOMER. THE CIT(A) FURTHER NOTES THAT NO MATERIAL WAS PREPARED FOR SUPPLY TO ANY PROSPECTIVE CUSTOMER OR ANY CONSULTANCY SERVICE WAS ACTUALLY OFFERED TO ANY PROSPECTIVE CUSTOMER. IN-FACT, EVEN BEFORE US NO SUCH MATERIAL HAS BEEN PRODUCED. DURING THE COURSE OF HEARING BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE WAS SPECIFICALLY R EQUIRED TO DEMONSTRATE AS TO WHETHER ANY CORRESPONDENCE OR CUSTOMER INTERFACE WAS MADE SO AS TO INFER THAT ASSESSEE HAD STARTED ITS ACTIVITY OF ADVISING CUSTOMERS ON PRE-FABRICATED BUILDING SOLUTIONS. HOWEVER, NO COGENT RESPONSE CA ME-FORTH ON THIS ASPECT. THEREFORE, CONSIDERING THE MATERIAL ON RECORD, WE H EREBY AFFIRM THE INFERENCE OF THE CIT(A) THAT ASSESSEE HAS FAILED TO PLACE ANY MATERIAL ON RECORD TO SHOW THAT ANY CONSULTANCY MATERIAL WAS DEVISED OR ANY SU CH SERVICE WAS TENDERED TO ANY PROSPECTIVE CUSTOMER. ITA NO.1437/PN/2009 A.Y. : 2005-06 11. MOREOVER, THE RELIANCE PLACED BY THE ASSESSEES COUNSEL ON THE DECISION OF THE PUNE BENCH OF THE TRIBUNAL IN THE C ASE OF STYLER INDIA (P) LTD. (SUPRA) IS ALSO NOT JUSTIFIED. THE SAID DECISION H AS BEEN RELIED UPON FOR THE PROPOSITION THAT IN THE CASE OF SERVICES SECTOR A B USINESS CAN BE SAID TO HAVE BEEN SET-UP IF ASSESSEE WAS ABLE TO SHOW THAT IT HA S STARTED CORRESPONDING WITH VARIOUS PARITIES TO MAKE THEM AWARE OF THE PRO DUCTS IN WHICH ASSESSEE WAS DEALING ETC. . THE PROPOSITION BEING RELIED UPON BY THE ASSESSEE BEFORE US, BASED ON THE DECISION OF THE TRIBUNAL IN THE CA SE OF STYLER INDIA (P) LTD. (SUPRA), IS NOT IN DISPUTE. SO HOWEVER, IN THE CAS E BEFORE THE PUNE BENCH OF THE TRIBUNAL, ASSESSEE HAD SPECIFICALLY REFERRED TO CORRESPONDENCES WITH PROSPECTIVE CUSTOMERS AND OTHER MATERIAL AND FACTUA LLY THE TRIBUNAL CAME TO CONCLUDE THAT ASSESSEE COMPANY HAD SET-UP ITS BUSIN ESS. IN PARAS 21 AND 22 OF THE ORDER OF THE TRIBUNAL, THE FACTUAL ASPECT OF THE ASSESSEE HAVING CORRESPONDED WITH PROSPECTIVE CUSTOMERS AS ALSO WIT H THE GOVERNMENT ENTERPRISES, ETC. HAS BEEN BROUGHT OUT. FACTUALLY SPEAKING, THE AFORESAID POSITION IS MISSING IN THE PRESENT CASE. IN THE PR ESENT CASE, THERE IS NO MATERIAL OR BROCHURES, ETC. PREPARED BY THE ASSESSE E TO ENLIGHTEN THE PROSPECTIVE CUSTOMERS ABOUT PRE-FABRICATED BUILDING SOLUTIONS. NO MATERIAL WHATSOEVER HAS BEEN REFERRED BY THE ASSESSEE TO SUP PORT THE INITIATION OF SERVICES. THEREFORE, THE DECISION OF THE TRIBUNAL IN THE CASE OF STYLER INDIA (P) LTD. (SUPRA) RELIED UPON BY THE ASSESSEE IS DISTING UISHABLE ON FACTS AND DOES NOT HELP THE CASE OF THE ASSESSEE. 12. EVEN THE PLEA OF THE ASSESSEE THAT ITS ACTIVITY HAS FRUCTIFIED THE EARNING OF THE INCOME IN THE SUBSEQUENT YEAR HAS ALSO BEEN ADDRESSED BY THE CIT(A). THE CIT(A) IN PARA 4.4.4 OF HIS ORDER HAS REFERRED TO THE ASSESSMENT RECORD FOR THE ASSESSMENT YEAR 2006-07 AND NOTES THAT THE ONLY INCOME EARNED WAS STATED TO BE FOR SERVICES CLAIMED TO HAVE BEEN REND ERED TO A SISTER CONCERN OR A RELATED PARTY AND NOT TO ANY OTHER PROSPECTIVE CU STOMER. THEREFORE, THE CLAIM OF THE ASSESSEE THAT THE EFFORTS MADE DURING THE YEAR UNDER ITA NO.1437/PN/2009 A.Y. : 2005-06 CONSIDERATION FRUCTIFIED IN THE SUBSEQUENT YEAR WAS DISMISSED AS LACKING IN SUBSTANCE. EVEN BEFORE US, THE AFORESAID POSITION CONTINUES TO HOLD THE FIELD AND WE FIND NO REASONS TO DISTRACT FROM THE ORDER O F THE CIT(A) ON THIS ASPECT. THUS, WE HOLD THAT THE CIT(A) MADE NO MISTAKE IN HO LDING THAT ASSESSEE HAS FAILED TO ESTABLISH EITHER SETTING-UP OR COMMENCEME NT OF ITS BUSINESS DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR U NDER CONSIDERATION. 13. AS A CONSEQUENCE, THE EXPENSES OF RS.55,91,977/ - CLAIMED AS REVENUE EXPENDITURE IS NOT JUSTIFIED. SIMILARLY, ASSESSEE S CLAIM FOR ALLOWANCE OF DEPRECIATION OF RS.4,15,209/- UNDER THE PRETEXT THA T FIXED ASSETS WERE USED FOR BUSINESS IS ALSO NOT JUSTIFIED SINCE THERE IS NO MA TERIAL TO SAY THAT THE BUSINESS OF THE ASSESSEE WAS ACTUALLY SET-UP DURING THE YEAR UNDER CONSIDERATION. ON THE ASPECT OF THE DEPRECIATION, WE MAY ALSO NOTICE THAT WITHOUT PREJUDICE TO HIS STAND THAT BUSINESS ITSELF WAS NOT SET-UP OR COMMEN CED DURING THE YEAR UNDER CONSIDERATION, THE CIT(A) IN PARA 5.3.1 HAS CONCLUD ED THAT THERE WAS NO MATERIAL TO ESTABLISH PUTTING TO USE OF THE ASSETS DURING THE YEAR UNDER CONSIDERATION. SUCH FACTUAL FINDING HAS NOT BEEN C ONVERTED BEFORE US AND ACCORDINGLY THE SAME IS HEREBY AFFIRMED. 14. THE GROUND OF APPEAL NO.3 RAISED BY THE ASSESSE E CAN BY UNDERSTOOD AS FOLLOWS. THE ASSESSING OFFICER IN PARA 6.1 OF T HE ASSESSMENT ORDER OBSERVED THAT ASSESSEE AGREED THAT EXPENSES OF RS.4 3,46,032/- CLAIMED UNDER THE HEAD ESTABLISHMENT AND OTHER EXPENSES B E DISALLOWED AND AGREED FOR AMORTIZATION AS PER PROVISIONS OF SECTION 35D O F THE ACT. THE SAID OBSERVATION WAS SOUGHT TO BE CHALLENGED BY THE ASSE SSEE BEFORE THE CIT(A). THE CIT(A) HAS DISCUSSED THE SAID ASPECT AS FOLLOWS :- 4.4.7 WITH REGARD TO THE CONTENTION OF THE APPELLA NT THAT THE ASSESSING OFFICER DISALLOWED THE ENTIRE EXPENDITURE OF RS.43,56,032/- AS AGAINST THE CLAIM OF RS.5,91,977/- MADE IN THE RETU RN OF INCOME FILED, IT IS TO BE MENTIONED THAT THE APPELLANT HAS DISALLOWED EXPENDI TURE OF RS.36,37,148/- U/S. 40(A)(IA) AND THE ASSESSING OFFICER VIDE PARA 7 OF THE ASSESSMENT ORDER OBSERVED THAT THE DISALLOWANCE UNDER THIS SECTION I S NOT WARRANTED AS THE ENTIRE EXPENDITURE IS REQUIRED TO BE AMORTIZED/CAPI TALISED. THE DISALLOWANCE ITA NO.1437/PN/2009 A.Y. : 2005-06 WAS MADE BY THE ASSESSING OFFICER ON A DIFFERENT GR OUND THAT BUSINESS WAS NOT COMMENCED DURING THE YEAR. IF THE EXPENDITURE IS DI SALLOWED U/S. 40(A)(IA), THE SAME MAY HAVE TO BE ALLOWED IN THE YEAR IN WHICH TH E IDS WAS MADE AND CREDITED TO THE GOVT. A/C. BUT THIS IS NOT THE CASE OF THE APPELLANT AS THE EXPENDITURE WAS INCURRED PRIOR TO SETTING UP OF THE BUSINESS AND, THEREFORE, THE SAME CANNOT BE CONSIDERED FOR DISALLOWANCE UNDER TH E HEAD 'BUSINESS OR PROFESSION' I.E. U/S. 40(A)(IA). THEREFORE, THE ASS ESSING OFFICER IS JUSTIFIED IN STATING THAT THE DISALLOWANCE OF EXPENDITURE U/S. 4 0(A)(IA) IS NOT WARRANTED AND THE EXPENDITURE IS REQUIRED TO BE AMORTIZED/CAPITAL IZED. 15. IN THE ABSENCE OF ANY ARGUMENT PUT-FORTH BY THE ASSESSEE BEFORE US ON THIS ASPECT, WE HEREBY AFFIRM THE AFORESAID DECISIO N OF THE CIT(A). THUS, GROUND OF APPEAL RAISED BY THE ASSESSEE IS DISMISSE D. 16. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH MARCH, 2014. SD/- SD/- (R.S. PADVEKAR) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED: 20 TH MARCH, 2014. SUJEET/GCVSR COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-I PUNE; 4) THE CIT-I, PUNE; 5) THE DR B BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// SR. PRIVATE SECRETARY I.T.A.T., PUNE