2013 (4) TMI 341

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....cts and in the circumstances of the case and in law, the Ld CIT (A) erred in deleting the disallowance made by AO out of cash expenditure of Rs. 2,00,000/-." 3. Briefly stated relevant facts of the case are that the assessee is a partnership firm engaged in building construction activities. Assessee commenced a residential housing project called 'Gagan Galaxy' at Vasai Road (East) as per the approvals of the CIDCO in FY 2004-2005. The total project constitutes of 29,321 sq ft. and the cost of construction works out to Rs. 1.97 Cr (rounded off). This includes Rs. 63,57,839/- which was incurred subsequent to the date of 12.12.2006. The project is completed in the year under consideration. Date 12.12.2006 is the date on which assessee is said....

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....d out the alleged expenditure of Rs. 63,57,839/- and he tabulated the head-wise expenditure giving description of raw material, purchases after 12.12.2006 and remarks against each of the items. Para 3.2 is relevant in this regard. Finally, after examining the nature of the expenditure and its nexus to the project 'Gagan Galaxy', upheld the genuineness of the claim of the assessee as per the discussion given in para 3.2.1. CIT (A) gave complete relief in this regard. Aggrieved with the same the Revenue is in appeal before the Tribunal. 4. During the proceedings before us, Dr. Shivaram, Ld Counsel for the assessee filed a facts sheet as usual and stated that the AO is improper in invoking the provisions of section 145(3) of the Act when ther....

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.....2.1 are relevant portions of the impugned order and the same are reproduced here under in view of its significance. "1. I have considered the rival submission of the appellant and finding of the Assessing Officer, carefully. I have also perused the evidence on record and details of expenses submitted by the appellant. I find that Ld AO has accepted the genuineness of purchase of various goods but has merely doubted the utilization of the same. He has disallowed the claim of all such expenses merely on the basis of presumption, ignoring the facts that most of the expenditure and raw-materials are necessary even after issuance of letter of completion of the project by the architect. It is widely known fact that even after primary completion....

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....e analysis of all the expenses, I reach to the conclusion that finding of the Ld AO is not matured enough nor is having proper foundation for disallowing the genuine claim of the appellant whereas appellant has succeeded in making out its case and explaining the genuineness of expenditure required to be incurred for ultimate and satisfactory completion of the project. Therefore, the disallowance so made by the AO of Rs. 50,00,000/-, in round figure, is directed to be deleted from the assessment." 6. From the above, it is evident that the expenditure in question is directly connected to the project Gagan Galaxy only and the AO has not appreciated this fact by closely examining the material available before him. Further, the CIT (A) allowed ....