2019 (4) TMI 364

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....thod 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 and it was not eligible for any such deduction. 4. On the facts ....

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....ng 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 year and expenses debited to P&L account was on account of salary, legal and professional assured retur....

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....aration 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 us. 8. Admittedly assessee is following project completion method. 8.1. Ld.AO disallowed these expenses on the....