The assessee, Lifestyle and Media Holdings Limited, a holding company incorporated to invest in and oversee subsidiaries operating in the non-news lifestyle media segment, had claimed deduction of routine administrative and statutory expenses incurred during the relevant assessment years. The Assessing Officer disallowed the expenditure on the ground that no active business operations were carried out and further denied set-off of the resultant business loss against income from other sources.

The Commissioner of Income Tax (Appeals) affirmed the disallowance, holding that mere holding of investments did not amount to carrying on business within the meaning of Section 2(13) of the Income Tax Act, 1961, and consequently, expenses under Section 37(1) were not allowable.

On appeal, the Delhi Bench of the Income Tax Appellate Tribunal examined the memorandum of association and factual matrix and observed that the principal object of the assessee was to act as a holding company by making strategic investments in subsidiary companies engaged in lifestyle media operations. The Tribunal held that such investment activity, undertaken to exercise control and further business objectives, itself constitutes a business activity.

Relying upon the decision of the coordinate bench in NDTV Networks Ltd. [2025] 173 taxmann.com 269 (Delhi) and the Mumbai ITAT ruling in Tata Sons Ltd., the Tribunal reiterated the settled principle that earning of income is not a pre-condition for allowability of business expenditure. Once a business is set up and expenses are incurred in furtherance of the stated objects, such expenditure cannot be disallowed merely because no operational revenue has arisen.

Accordingly, the Tribunal allowed the deduction of business expenditure claimed by the assessee and further directed that the resulting business loss be set off against income from other heads in accordance with Section 71 of the Act.
The appeals for all the relevant assessment years were allowed in favour of the assessee.

 Source Link- https://itat.gov.in/public/files/upload/1767171072-yn3Gw6-1-TO.pdf

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