Pre-operative expenditure cannot be allowed as business expenditure

NDTV Studios Ltd. Vs Income ITO (ITAT Delhi)

Held that as the business has not been set up during the year under consideration all the pre-operative expenditures are not deductible as business expenditure

Facts-

The assessee filed its return of income declaring income of Rs. 21,03,02,529/- which was processed u/s 143(1) of the Act, subsequently, selected for scrutiny and notices were issued. The assessment order came to be passed on 17/12/2012 against the assessee by disallowing the claim of Rs. 52,25,161/- made by the assessee as business expenditure.

A.O while framing assessment order held that the ‘business of the assessee had not been set up during the year under consideration and all the expenses claimed by the assessee are pre-operative in nature which should have been capitalized. Thus the Ld. A.O held that the expenses claimed by the assessee are not deductible as business expenditure’ and the same has been disallowed.

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