Expenditure incurred during the interval period of setting up of a new business and its commencement can be allowed as deduction

Last updated: 26 December 2022
Quick Summary
The Income Tax Appellate Tribunal (ITAT) in Pune has ruled that expenditure incurred by a company during the period between setting up a new business and its actual commencement can be allowed as a deduction. The tribunal found that tax authorities had not properly examined the facts of the case, including whether the business was indeed set up and ready to commence operations. Consequently, the matter was sent back to the Assessing Officer for a fresh decision.

Court :
ITAT, Pune

Brief :
The ITAT, Pune in Messung Systems Private Limited v. ITO [ITA No.683/PUN/2018 dated November 7, 2022] partly allowed the appeal of the assessee against the order passed by the Revenue Department holding that the expenses incurred for pre- operative nature cannot be set-off against the interest income. Held that, expenditure incurred by a company during the setting up of new business and its commencement can be allowed as deduction.

Citation :
ITA No.683/PUN/2018 dated November 7, 2022

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Bimal Jain
Published in Income Tax
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