Assessee-company, engaged in business of hotels, motels and catering, had purchased a semi-constructed building and land.\u00a0 It entered into a hotel operating agreement with IHCL for operating hotels on said land and incurred certain amount of expenses which were claimed same as deduction under section 37(1) of the Act\u00a0 Assessing Officer\u00a0 disallowed the claim on the ground that\u00a0 during year assessee had neither commenced its business operations nor had earned revenue from operations, thus, such expenses claimed being pre-operative in nature were to be capitalized.\u00a0 Held that\u00a0 the\u00a0 assessee had obtained long term borrowings and acquired tangible and intangible assets and had paid mobilization advances to various vendors. Assessee had also deputed staff and paid salaries. Business could be said to have been set-up from date when one of categories of business activity was started and it is not necessary that all categories of business activities must start either simultaneously or that last stage must start before it could be said that business was set-up. Since assessee had acquired necessary infrastructure for its business and had started paying salaries and allowances of experts, assessee had achieved process of establishing business and, thus, business expenditure claimed during relevant years was to be allowed as deduction. (AY. 2012-13, 2013-14)<\/p>\n","protected":false},"excerpt":{"rendered":"
S. 37(1) : Business expenditure-Pre-operative expenses-Capital or revenue-Business of hotels, motels, catering etc.-Setting up business-Salaries and allowances to experts-Allowable as business expenditure. <\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-34007","post","type-post","status-publish","format-standard","hentry","category-income-tax-act"],"acf":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p9S2Rw-8Qv","jetpack-related-posts":[],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/34007","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/comments?post=34007"}],"version-history":[{"count":2,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/34007\/revisions"}],"predecessor-version":[{"id":35398,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/34007\/revisions\/35398"}],"wp:attachment":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/media?parent=34007"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/categories?post=34007"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/tags?post=34007"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}