AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2016 (4) TMI 752
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....e of convenience. The issue raised in all the appeals is identical and we proceed to decide the present appeals after referring to the facts in ITA No.1439/PN/2012 relating to assessment year 2001-02. 3. The assessee in ITA No.1439/PN/2012 has raised the following grounds of appeal:- 1) On the facts and circumstances of the case and in law the Ld. CIT(A) ought to have passed a 'speaking order' as warranted by S. 250(6) of the Act and ought to have followed the directions of the Hon'ble Tribunal issued while deciding the appeal of the assessee for A. Y. 2001 -02 in ITA No.1595S/PN/2005 dt. 21st July 2006. The order of the Ld. CIT(A) being not in consonance with the provision of law be quashed allowing the appeal. 2) On the facts and circumstances of the case and in law the Ld. CIT(A) failed to take into account the expenses disallowed were debited in the accounts and also formed the part and parcel of closing WIP the valuation of which was done by the appellant by a method consistently followed by it. It is absurd to disallow expenses without disturbing the closing WIP which action is contrary to accounting principles. The Ld. CIT(A) failed to consid....
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....the Ld. CIT(A) whether income, profits and gains can properly be deduced therefrom and to proceed according to his judgment on this question. The Ld. CIT(A) failed to answer this question. Simply by enhancing closing stock it cannot be said income, profit and gains cannot be deduced therefrom. The basic directions have not been followed. 8) On the facts and circumstances of the case and in law and in the context the Ld. CIT(A) was not justified in confirming the disallowance of supervision charges of Rs. 3,60,565/- made by the A. O. The disallowance be quashed. 9) On the facts and circumstances of the case and in law and in the context the Ld. CIT(A) was not justified in confirming the disallowance of Site Expenses of Rs. 98,461/- made by the A. O. The disallowance be quashed. 10) On the facts and circumstances of the case and in law and in the context the Ld. CIT(A) was not justified in confirming the disallowance of Society Charges of Rs. 82,815/- made by the A. O. The disallowance be quashed. 11) On the facts and circumstances of the case and in law and in the context the Ld. CIT(A) was not justified in confirming the disallowance of Interest ....
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....ee explained the details of projects undertaken and also the details of closing value of work-in-progress. Further, the assessee challenged the addition of Rs. 38,28,448/- and pointed out that where whether the said expenses could be considered as direct expenses debitable to Trading account. The assessee in turn, explained the nature of each of the expenses before the CIT(A) and the submissions of the assessee in this regard are incorporated at pages 9 to 13 of the appellate order. The CIT(A) in the first round, upheld the order of Assessing Officer, which was agitated before the Tribunal and the Tribunal restored the issue back to the file of CIT(A) for de novo examination of the issue. In the second round of the appellate proceedings, the CIT(A) was of the view that the expenses which were directly attributable to any particular contract should be charged to the contract account or the Trading account and thus, would form part of work-in-progress. Vide para 4.2 at pages 21 onwards, the CIT(A) took note of the individual disallowances made by the Assessing Officer and was of the view that where the expenses were directly relatable to the project which were yet to be completed, th....
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....nd it was pointed out that all these expenses were allowable as revenue expenditure in the hands of assessee. 9. The learned Departmental Representative for the Revenue on the other hand, placed reliance on the order of CIT(A). 10. We have heard the rival contentions and perused the record. The issue arising before us is whether the expenditure claimed by the assessee is revenue in nature, which in turn, is allowable in the hands of assessee under section 37(1) of the Act or since the assessee was following project completion method, the said expenses were to be carried forward as work-in-progress, to be allowed in the respective year when the units were sold. 11. In the facts of the present case, the assessee was engaged in the development of buildings and was undertaking several projects, which were at different stages of completion. The assessee had bifurcated the expenses as being relatable to the cost of construction of projects undertaken by the assessee and depending on the stage of completion had credited the amounts to work-in-progress. Certain expenses were claimed as revenue expenditure by the assessee, which had been allowed by the Assessing Officer. The said s....
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....that from this step down Transformer the MSEB authorities distribute electricity connections to the assessee. The MSEB provides the service lines to all adjoining schemes from this Transformer and after the installation of said Transformer, cost of which was borne by the assessee, becomes the property of MSEB. Further, cost of the service lines connection paid to MSEB were Rs. 13,24,400/- by which the electricity is transmitted to the premises of the assessee. The said expenditure was also claimed as business expenditure under section 37(1) of the Act. 14. The first aspect of the issue is whether the assessee while following percentage completion method, is entitled to claim certain expenditure as part of its work-inprogress and certain other expenditure as business expenditure. Undoubtedly, where the assessee is running its business, certain expenses have to be incurred from day to day for the running of business. Where the expenditure is relatable to day to day running of the business, the said expenditure is allowable as revenue expenditure in the hands of assessee irrespective of the fact that the assessee was following percentage completion method of recognizing its revenue....