Expenses incurred after setting up but before commencement of business are deductible under Section 37 of the Income Tax Act.

ORDER

Per George Mathan, JM :

This is an appeal filed by the assessee against the order of the ld.CIT(A)-3, Kolkata, dated 29.12.2017 for the assessment year 2014-2015.

2. None represented on behalf of the assessee. Shri Abhijit Adhikary, Sr. DR appeared on behalf of the revenue.

3. It was submitted by the ld. Sr. DR that the appeal has been filed by the assessee and as nobody appeared on behalf of the assessee, the order of the ld. CIT(A) is liable to be confirmed. It was the further submission that in para 4 of the assessment order, the ld. Assessing Officer has disallowed the expenses and the same have also been confirmed by the ld. CIT(A). In this case, it must be mentioned that this appeal is of 2018 and appeal had been heard on multiple occasions and had been released for various reasons. As of today, and for the last past few postings/hearings, none represented on behalf of the assessee. Therefore, keeping this fact pending does not serve the issue of justice. Consequently, this appeal is heard ex-parte the assessee.

4. Facts in the present case, as mentioned in the assessment order, shows that the stand of the revenue is that the assesse’s business has not started. A perusal of the assessment order clearly shows that the assessee is a company. The page 1 of the assessment order shows that the AR of the assessee had provided all the details before the Assessing Officer. On the earlier occasions the assessee has already filed written submission which reads as follows :-

BEFORE THE LEARNED INCOME TAX APPELLATE TRIBUNAL "B" BENCH KOLKATA In the matter of:

IT Appeal No.357/KOL of 2018 Sahara India Tourism Development Corporation Limited - Appellant Vs ACIT, Circle-8(2), Kolkata - Respondent BRIEF NOTE OF SUBMISSIONS ON BEHALF OF THE ASSESSEE BRIEF FACTS

1.1 The assessee, incorporated on July 4, 2003, is engaged in 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. The ship had restaurant, swimming pool, bed rooms, etc., and only minor renovation was required which was carried out to make it ready for use. The application for general trading licence was made to the Directorate General of Shipping on January 8, 2014 (page 315 of the Paper Book). Since the floating hotel business was set up but had not commenced, the assessee did not claim depreciation in respect of cost of Rs.80,96,78,357 incurred for acquiring the ship and for its renovation and the said amount was shown in the fixed assets schedule under the head "Capital Work in Progress" (page 56 of the Paper Book). After the business was set up and during the pendency of the application for licence, towards the end of the year, liquidity constraints cropped up due to freezing of the assessee's deposits and other assets by the authorities because of which the commercial launch of the business of the hotel could not take place during the relevant previous year.

1.2 The recurring operating expenses of the ready floating hotel, which were revenue in nature, aggregated to Rs.1,27,85,029 (including crew expenses of Rs.33,76,267) and were charged to the statement of profit and loss for the previous year ended March 31, 2014. The assessee also had staff at its Mumbai office which looked after the accounts, administration, human resources, legal and statutory compliances, etc. The expenses incurred in respect of the employees (including expenses of Rs.33,76,267 in respect of the crew of the cruise ship) aggregated to Rs.1,22,83,939 and were shown