Section 264 of Income Tax Act, 1961—Revision—Revision invalid as condition remains unfulfilled.

Facts: The writ petitioner seeks the intervention of the Court to set aside an order of the Principal CIT under Section 264. The petitioner is aggrieved by the assessment order made by AO for the AY 2013-2014, wherein the AO disallowed three items of expenditure claimed as deduction, i.e., depreciation, preliminary expenses, and employees’ remuneration.

Held, that assessee was engaged and incorporated for carrying on trading activities in different commodities. When the trader start providing goods and services, the business is said to have commenced but the same may not hold good for set up of a business, which is a stage before the commencement. Court is of the opinion that the petitioner’s activity, which it claims to be preliminary steps towards the fulfillment of the purpose, which is embodied in the MoU and extracts of which have been reproduced clearly indicates that it had set up its business and that these steps were for the ultimate fulfillment of its purposes, which was the preparation of development plans leading to the projects. Principal CIT was plainly wrong in holding otherwise. The order of CIT as well as the AO are set aside. The writ petition is allowed in the above terms. - INDIAN RAILWAY STATIONS DEVELOPMENT CORPORATION LTD. V/s PR. CIT - [2020] 314 CTR 271 (DEL)