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The ITAT upheld the CIT(A)'s reduction of disallowance on work-in-progress (WIP) expenses to 10%, finding the revenue's arbitrary adoption of this percentage without objective data impermissible, thereby allowing the assessee's ground and dismissing the revenue's claim. Regarding interest paid to a partner on capital introduced, the tribunal found the assessee's claim substantiated with adequate documentation and no evidence provided by the AO to prove the interest rate was excessive or unreasonable. The interest paid at 10.7% was deemed a legitimate financial cost integral to the project's sustenance. Consequently, the addition made by the AO was set aside, and the revenue's ground was rejected. Thus, both appeals by the revenue were dismissed, affirming the CIT(A)'s orders in favor of the assessee.
The ITAT upheld the CIT(A)'s reduction of disallowance on work-in-progress (WIP) expenses to 10%, finding the revenue's arbitrary adoption of this percentage without objective data impermissible, thereby allowing the assessee's ground and dismissing the revenue's claim. Regarding interest paid to a partner on capital introduced, the tribunal found the assessee's claim substantiated with adequate documentation and no evidence provided by the AO to prove the interest rate was excessive or unreasonable. The interest paid at 10.7% was deemed a legitimate financial cost integral to the project's sustenance. Consequently, the addition made by the AO was set aside, and the revenue's ground was rejected. Thus, both appeals by the revenue were dismissed, affirming the CIT(A)'s orders in favor of the assessee.
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