Case Law Details
Bharti Land Limited Vs ACIT (ITAT Delhi)
ITAT Delhi held that that expenditure incurred between setting up and commencement of business could not have been capitalized and was to be allowed as business expenditure.
Facts- AO noted that assessee company was incorporated on 12.01.2015 for the purpose of acquiring, constructing, developing and leasing/sale of real estate properties in India or abroad. AO noted that the year under consideration, is almost the first year of business of the assessee company; during the year under consideration, the assessee has not received any revenue from the business activity of the assessee company but claimed expenditure related to business i.e. Employee Benefits Expenses of Rs.2,06,95,136/-, Finance Cost of Rs.46,713/-, depreciation of Rs.33,43,023/- & Other Expense of Rs.2,77,93,814/- and claiming, business loss of Rs.4,06,96,408/-; that here is no direct nexus between income and expenditure of the assessee during the year under consideration; that vide note-sheet dated 11.12.2018, the assessee company was asked since no revenue is earned/accrued by the assessee company, why the business loss of Rs.4,06,96,408/- should not be capitalized.
Not being satisfied with assessee’s submission, AO disallowed the business loss. CIT(A) confirmed the action of AO. Being aggrieved, the present appeal is filed by the assessee.
Conclusion- Hon’ble jurisdictional High Court in the case of Maruti Insurance Broking Private Limited has duly held that expenditure incurred between setting up and commencement of business could not have been capitalized and was to be allowed as business expenditure.
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