Sahara India Tourism Development Corporation Ltd Vs ACIT, Circle-8(2), Kolkata
Parties Involved
Facts Summary
The assessee, incorporated on July 4, 2003, is engaged in the hospitality business. During the previous year relevant to the assessment year 2014-15, the assessee acquired a cruise ship for running a floating hotel in Goa. The ship was brought from Italy to Goa and required minor renovation to be made ready for use. Despite the business being set up, it did not commence due to liquidity constraints and the freezing of the assessee's deposits and other assets by the authorities. The assessee incurred various expenses, including those for the cruise ship and its Mumbai office, which were disallowed by the Assessing Officer (AO) on the grounds that they had no nexus with the interest income from fixed deposits. The Commissioner of Income Tax (Appeals) (CIT(A)) upheld the disallowance, holding that the business was not set up since the licence had not been obtained.…
Decision in favour of
Assessee
Legal Issues
- 1. Whether the business of the assessee was set up prior to obtaining the licence.
- 2. Whether the expenses incurred prior to the commencement of business are allowable.
Judgment Outcome
Decided in favour of Assessee.
Precedents Relied Upon
8 precedents cited in this judgement.