Law:

Section:

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 expenses which it claimed as business expenditure. The Assessing Officer held that business of the assessee did not commence during the relevant year and treated all the expenses…

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