TaxTMI 
TaxTMI 
2014 (8) TMI 793
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.... Civil construction activities. Assessee filed its return of income for A.Y. 07-08 on 31.10.2007 showing total income of Rs. 6,23,020/-. The case was selected for scrutiny and thereafter the assessment was framed u/s. 143(3) vide order dated 18.12.2009 and the total income was determined at Rs. 24,99,600/-. Aggrieved by order of A.O, Assessee carried the matter before ld. CIT(A). Ld. CIT(A) vide order dated 08.08.2012 granted partial relief to the Assessee. Aggrieved by the aforesaid order of CIT(A), Assessee is now in appeal before us and has raised the following concise grounds:- 1. Ld. CIT (A) erred in law and on facts in confirming disallowance made by AO of Rs. 11, 69, 023/- electricity charges paid to Torrent Power AEC Ltd. Both th....
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....ed during the year. He accordingly disallowed Rs. 11,69,023/-. Aggrieved by the order of A.O, Assessee carried the matter before CIT(A). CIT(A) upheld the order of A.O by holding as under:- In respect of ground related to disallowance of Rs. 11,69,023 on account of prior period expenses, I am not inclined to accept the contentions of the A.O. in totality. There is no doubt that if any assessee follows mercantile system of accounting then he should claim expenses in the year in which the same are incurred. But, in the case of appellant, A.O. has not appreciated the fact in this regard. The appellant also has not put forward the facts properly. As contended by appellant that the amount was paid to Torrent Power AEC Ltd. for obtaining elect....
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....to 30 of the submission. Further security deposit of Rs. 1,14,640 was paid on 16.12.2005 for which receipts copies are placed at page 31 to 52 of this submission. A further amount of Rs. 34,800 was paid on 26.12.2005 for security deposit for which copies of receipt submitted on page No. 53 & 54. An amount of Rs. 1,15, 221 was shown as receipt on 26.12.2005 vide cheque No. 712144 U.T.I. Bank Ltd. It is therefore as on 31.3.2005 the appellant paid Rs. 11 ,69,023. Again on 23.02.2007 (copy of receipt on page 53) an amount of Rs. 1,55, 731 was paid vide cheque NO. 933599 of Bank of Baroda current a/c.No.100019, It is therefore total amount of Rs. 13,24,754 (Rs.1 1,69,023 + 1,55,731) was debited in P&L account as electricity expenses. (iii) A....
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....- "1.3. Recognition of Revenue:- (a)Revenue in case of completed unit is accounted on completion and sale of unit. (b)Revenue in case of contract is accounted on the basis of percentage of work completed." It is therefore, these expenses have to booked with respect to sale shown (Revenue recognized) from the 'Radhe Kishan Villa' scheme to arrive at proper computation of profit. In the absence of such details, it is not ascertainable that out of total expenditure for 30 service connection how much rate had already effected and how much is there in work in progress. Further it is also not ascertainable whether this expenses has to meet out independently by each member of the scheme "Radhe Kishan Villa" or by appellant i.e.....
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....lso pointed to the certificate issued by the Electricity Department placed at page 7 of the paper book in support of contention that the permission was granted on 25.01.2007 and therefore the work was completed in A.Y. 07-08and thus Assessee has rightly claimed the amount as expenditure and therefore no disallowance was called for. Ld. D.R. on the other hand took us through the order of ld. CIT(A) and supported the order of A.O and ld. CIT(A). 8. We have heard the rival submission and perused the material on record. Before us, it was submitted that the electrical installation was obtained for its project "Radhe Kishan Villa" which was a multi storeyed building the permissions for electricity was received on 25.01.2007 relevant to assessment....
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....ntention of the appellant that the same was an advance and since bore well started working in previous year, the same is written off as revenue expenditure. The appellant has not substantiated the fact that - (i) The expenses incurred in A.Y. 2004-05 were carried forward as advances. (ii) There is no evidence in the nature of bills & certificate from any engg. Of supplier that the same bore well put right during the previous year. (iii) The location of bore well with respect to various schemes developed by appellant is not submitted. As discussed in previous para (b) that appellant following percentage completion method hence the expenditure related to a particular project has to be apportioned or written off against the income of ....