TaxTMI 
TaxTMI 
2020 (2) TMI 451
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.... ld. CIT (A) has erred both in law and on facts in confirming the action of AO in completing the assessment at alleged loss of Rs. 2,75,105/- as against the returned loss of Rs. 55,16,277/-. 2. That the ld. CIT (A) has erred in law and on facts in: 2.1 disallowing expenses amounting to Rs. 52,41,172/- by holding the same to be capital in nature. 2.2 alleging that the appellant has failed to offer any explanation in support of its claim that the expenditure is allowable under section 37(1). 2.3 in affirming the action of AO and not appreciating that the above expenditure, being revenue in nature, is allowable as a deduction under section 37 of the Act." 3. The assessee company fi led the return of income for the AY 2011-ficer t....
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....o be capitalized. Thereafter, when the assessee decided to close down those projects, by some stroke of genius suddenly realized that they were revenue in nature and revised the return. The assessee has taken the plea that they has done so under the advice of their chartered accountant but have not offered the any explanation to why the return was revised would be capital loss and not allowable as revenue expenditure." 5. Therefore, AO held them to be not revenue in nature and disallowed. 6. The ld. CIT (A) confirmed the addition holding that the expenditure was incurred for the proposed new projects. He held that the expenditure pertaining to the new projects have to be debited against the income of the new project only which was ....
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....nciples of taxation. Accordingly, the said expenditure amounting to Rs. 52,41,172/- incurred in respect of existing/new/proposed projects in the relevant assessment year, was disallowed in the return for assessment year 2012-13 as prior period expenses and the assessee revised the return of income for relevant assessment year on September, 28,2012 to claim thereof. It was argued that the assessee was constantly engaged in meeting potential clients, undertaking negotiations for entering into the contracts with such clients. It is submitted that it is only on account of persistent efforts made by the assessee in the relevant assessment year, it was successful in obtaining new business vide various contracts entered into in the subsequent year....