TaxTMI 
TaxTMI 
2019 (4) TMI 364
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssee has to be computed in accordance with POCM method without considering that the assessee had submitted before the AO that the construction of the building has not started during the year and there was no possibility of applying percentage completion method. 2. On the facts and in the circumstances of the case and in law, Ld. CIT(A) has erred in allowing deduction for various expenses following POCM method without examining as to whether the business of the assessee had started at all or not. 3. On the facts and in the circumstances of the case and in law, Ld. CIT(A) has erred in allowing deduction of Rs. 35,370/- on account of preliminary expenses without considering that the business of the assessee has not started an....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ny engaged in the business of construction of commercial buildings to be used as office spaces. During the course of assessment proceedings, Ld. AO observed that assessee had shown stock in hand at Rs. 68,86,91,281/-under the head income and had claimed expenditure amounting to Rs. 2,52,54,490/-. Ld. AO called upon assessee to explain as to why these expenses prior to commencement of business were not capitalized, but claimed as revenue expenses. In reply, assessee submitted that business commenced as on date of incorporation of assessee company and hence expenses incurred from date of incorporation were to be allowed as revenue expenses. Ld. AO after considering submissions, observed that no business activity was carried out during the yea....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s allowable under this section is expenditure in connection with preparation of any feasibility report, preparation of project report, conducting market survey or any other survey necessary for business of assessee, engineering services relating to business of assessee so on and so forth specifically mentioned under Sub- Clause 2 of Section 35D. He thus vehemently argued that preliminary expenses allowed by Ld. CIT (A) is not as per law. 6. On the contrary Ld.AR placed reliance upon order of Ld.CIT (A) and referred to decision of Hon'ble Delhi High Court in case of CIT vs M/s Doomketu Builders in ITA No. 528-529/2012 delivered on 23/03/13. 7. We have perused submissions advanced by both sides in the light of the records placed before ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t the case before us. There is no dispute regarding the business being set up during the year. 8.4. We are therefore of the view that Rs. 2,17,41,335/-towards assured returns to be capitalized/shown as work-in-progress. 8.5. As regards other expenses amounting to Rs. 32,51,545/- deleted by Ld.CIT (A), it is observed that assessee stated it to be in the nature of professional charges and commission. No details regarding the same was furnished by way of vouchers/bills, to ascertain true nature for its allowability. Before Ld.CIT(A) also assessee has not filed any details, and merely submitted that these are preliminary expenses. Audited accounts filed before us also do not reveal exact nature of these payments. Thus it could not h....