Assessee was engaged in business of real estate business. During relevant year, assessee raised huge amount of loan from banks and made investment in purchase of land which was reflected as stock in trade. Assessee also entered into development agreement with other builders for development of a township. Assessnig Officer rejected the claim holding that said expenditure was in nature of pre-operative business expenditure. On appeal the Tribunal held that the assessee had established its company, borrowed funds for purchase of portion of land in own name and further gave loan to associates for acquisition of land and then entered into development agreement for development of township therefore on facts it could be concluded that assessee had not only set-up its business but had also commenced its business during relevant year and, thus, assessee’s claim for deduction was to be allowed. (AY. 2006-07)