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HIGH COURT OF DELHI Commissioner of Income-tax, Delhi-IV, New Delhi v. ESPN Software India (P.) Ltd. V.B. GUPTA AND MADAN B. LOKUR, JJ. IT APPEAL NO. 516 OF 2007, MARCH 10, 2008 Section 28(i) of the Income-tax Act, 1961 - Business - Commencement of/Carrying on of - Assessment year 1997-98 - Whether a business is commenced as soon as an essential activity of that business is started - Held, yes - Assessee-company was incorporated on 1-8-1995 - On 15-8-1995, it had acquired a licence from its parent company to sub-licence ESPN services for distribution of programmes in India via cable television system - By virtue of that licence, it entered into an agreement on 1-10-1995 with company 'M' and appointed it as its sole distributor for distribution of ESPN programmes in India - During relevant assessment year, assessee incurred certain expenditures which were claimed by it as business expenditures - Assessing Officer held that since agreement with parent company to distribute ESPN services in India was dated 15-8-1995, while agreement with 'M' was dated 1-10-1995, it could not be said that before that date, assessee had commenced business - Accordingly, Assessing Officer held that assessee had not commenced its business during relevant period and treated all expenses as having been incurred prior to commencement of business - On appeal, Commissioner (Appeals) as also Tribunal held that assessee had commenced its business on 15-8-1995 and, therefore, all expenses incurred on or after that date were allowable as revenue expenditures - Whether since assessee was ready to commence its business on 15-8-1995 when it acquired licence, there was no infirmity with regard to said findings of authorities below - Held, yes FACTS The assessee-company was incorporated on 1-8-1995. On 15-8-1995, it had acquired a licence from its parent company to sub-licence 'ESPN' services for distribution of programmes in India via cable television system. By virtue of licence, the assessee entered into an agreement on 1-10-1995 with company 'M' and appointed it as its sole distributor for distribution of ESPN programmes in India. For the assessment year 1997-98, the assessee incurred certain…

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