The assessee shall be entitled to admissible business expenses from the day when the business was ready to commence and not from the date of actual commencement of the business,

GNG Stock Holdings (P) Ltd v DCIT  (ITAT Delhi) – When a business is established and is ready to commence business, then it can be said of that business that it is set up. But before it is ready to commence business, it is not set up. In other words, a business cannot be said to be set up before it is ready to commence. The actual commencement of the business may have some interval from the date when the business was set up, but in order to hold that the business is set up, it is to be seen as to whether it was ready to commence though actual commencement might not have been taken place. It is only after the date of setting up of the business that the previous year of the newly set up business would commence, and the expenses incurred prior to the date of setting up of business could not be taken into account for the purposes of determining the profits of a newly set up business. We, therefore, have to determine as to when, in the present case, the assessee was ready to commence business so as to say that the assessee’ s business had actually been set up. In the present case, the assessee shall be entitled to admissible business expenses from the day when the assessee’s business could be said to have been set up i.e. from the day when the business was ready to commence and not from the date of actual commencement of the business.

All the expenses incurred during the interval of setting up the business and the commencement of the business is allowable as a deduction under s 37.

The mere registration of the assessee-company under the Companies Act cannot be said to be the first stage relating to the activity of acting as trading members and clearing members of the wholesale debt market, capital market and futures and options segments of any stock exchange.

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