Even a single transaction may constitute business as defined  in section 2(13) of Income Tax Act 

Even a single transaction may constitute business as defined  in section 2(13) of the Income Tax Act 

ABCAUS Case Law Citation
ABCAUS 3435 (2021) (01) ITAT

Important case law relied upon by the parties:
ITO vs. Amrit Foods (P) Ltd. (1984) 10 ITD 681

In the instant case, the assessee had challenged the order passed by the CIT(A) in upholding the findings of the Assessing Officer (AO) in holding that the assessee was still in the process of setting up of business and therefore the business of the assessee has not commenced during the year.

During the year under consideration, assessee has declared loss in its ITR. The AO observed that out of total revenue only a meagre income was from operations and major income comprised of interest income and miscellaneous income.

The AO observed that the assessee had shown single purchase and sale thereafter no business transactions were there to generate revenue in the whole financial year.  

The AO was of the view that the transaction was not related to business and the nature of expense debited in the P&L account also did not relate to business operations rather it was of in the nature of carrying out research and analysis, feasibility for the business i.e. activity prior to setting up and commencement of business.

The AO disallowed the carry forward of loss for the year, as claimed in the return of income by invoking the provision of section 79 of the Income Tax Act, 1961 (the Act) and completed the assessment u/s 143(3) of the Act.

The Tribunal opined that the assessee had commenced its business in the relevant assessment year as the assessee had made its sale and purchase.

The Tribunal stated that it is well settled law that even a single transaction may constitute business as defined in  section 2(13) of the Act. It is not asking there should be a series of transaction.

Therefore, the Tribunal deleted the addition and allowed the appeal of the assessee in its favour.

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• Order u/s 69 of the CGST Act has to be communicated before arrest of person concerned– SC
• Refund can not be denied on the ground that it was claimed in a return filed u/s 148 – ITAT
• Distinction between religious & charitable purposes is determined by institution’s primary or dominant object
• Fit case to issue notice u/s 148 – Relevancy of material & application of mind to objections important
• AO is under an obligation to assign reasons for rejecting explanation of the assessee