Case Law Details
Brief of the case:
ITAT Mumbai held in Reliance gems & Jewels ltd Vs DCIT that the revenue expenditure would be allowed as an expense after the setting up of the business before the commencement of the business. The expense incurred on recruitment of employees gave indication that the business had been set up so the expenses incurred after setting up of the business related with the employees and other expense would be allowed as a revenue expense u/s 37(1).
Facts of the case:
The assesse had filed its return declaring loss of Rs 87,26,445/-. The case was selected for scrutiny and the AO came to know that the business had not been started by the assesse so the disallowed all the revenue expenses claimed by the assesse and made addition to the income. AO was of the view that expense could only be allowed as deduction only and only after the commencement of business not after setting up of the business. So assesse went into unsuccessful appeal with CIT(A) then assesse went into appeal with ITAT.
Contention of the assesse:
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