Law:

Section:

Section 28(i) of the Income-tax Act, 1961 - Business loss/deduction - Allowable as - Assessment year 1965-66 - Assessee-company was incorporated in August 1962 - Installation of machinery was completed in August 1963 - Power connection was secured in June 1964 and thereupon for first time in June 1964, itself, assessee purchased raw materials for carrying out production - Whether, on aforesaid facts, business of assessee must be said to have been set up from June 1964, and therefore, expenditure incurred by assessee-company from June 1964 should be allowed as deduction in determining its business profits - Held, yes FACTS The assessee-company was incorporated in August 1962. The installation of the machinery was completed in August 1963. The power connection was secured in second week of June 1964. For about four days in January, 1964, the assessee-company hired a generator set for a trial running of the machinery. On 10-6-1964, the assessee-company had purchased certain broken die blocks out of which raw material had been consumed in the experimental running of the machinery. The company had incurred expenditure of Rs. 53,303 during the year ending 30-6-1964, and this amount was claimed as expenditure incurred for the purpose of business carried on during the previous year relevant to the assessment year 1965-66. The Income-tax Officer held that the business of the assessee could not be said to have been set up till the company got power connection from the electricity company and a completion certificate of the factory from the municipality. He, therefore, disallowed the expenditure claimed by the company. The AAC confirmed the order of the Income-tax Officer. The Tribunal, however, took the view that the business of the assessee must be taken to be set up with effect from 27-8-1963, when the erection of machinery was completed. Thus, the Tribunal directed that the expenditure incurred by the company from 27-8-1963, should be allowed as deductions in determining the company's business profits. On reference : HELD If a question arises as to whether a particular business can be said to have been set up in the relevant assessment year, that question will have to…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492