L.M. Chhabda And Sons vs Commissioner Of Income-Tax, Gujarat on 21 March, 1967
In the case of the assessee, the business of sale of
set top boxes will be treated as set up when the first set top
box comes under its possession for sale. Section 28 applies
only respect of business carried on during the previous
year. As a consequence, the expenditure incurred before
the setting up a business would not be deductible while
computing income of the previous year. This view has been
upheld by the Hon'ble Supreme Court in the case of L.M.
Chhabda & Sons Vs CIT reported in 65 ITR 638. Further,
if the assessee carries on two businesses: A & B,
expenditure of business A is not deductible from profit and
business B, if business A was not carried on during the
previous year. This view has been given in the book
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