TaxTMI 
TaxTMI 
2020 (4) TMI 224
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.... u/s 143(3) of the IT Act, 1961 ('The Act') relating to assessment year 2012-13. 2. Grounds of appeal raised by the assessee reads as under; 1. On the facts and circumstances of the case, the ld.CIT(A) in not appreciating the fact that the assessee company has not incurred any expenditure towards earned exempt income and the investment made were out of surplus fund and disallowance under section 14A of Rs. 1,86,900/- is not warranted. 2.1 On the facts and circumstances of the case the ld.CIT(A) erred in not appreciating the fact that the assessee company is in the business of construction business and selling expenses incurred is revenue in nature. 2.2 On the facts and circumstances of the case, the ld.CIT(A) e....
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.... state of completion of each project reaches a reasonable level of progress. 6. The AO, at the time of framing the assessment under s.143(3) observed that the assessee has interalia claimed selling expenses of Rs. 1,38,22,515/- in the previous year relevant to assessment year 2012-13 in question as revenue expenses. It was further observed by the AO that the assessee has not recognized any revenue from sale of units in the year. It was observed that the assessee is engaged in the development of single project where the sales have been recognized only in the subsequent years. The AO further observed that the selling expenses were mostly comprised of advertising expenses of 'White field project'. In the absence of any revenue recognized fr....
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....nized (89.12 Crores) in the financial year 2013-14 when the parameter notified in the accounting standard were broadly met. In elaboration, it was submitted that revenue could not be recognized in the absence of transfer of significant risk and rewards to the potential buyers. 9.1 The ld.AR, further referred to para-19 & 20 of the accounting Standard-7 which reads as under; 19. Costs that cannot be attached to contract activity or cannot be allocated to contract are excluded from the costs of a construction contract. Such costs include: (a) General administration costs for which reimbursement is not specified in the contract; (b) selling Costs; (c) research and development costs for which reimbursement....
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....hereafter contended in the alternative that all expenses incurred in the normal course of business is required to be allowed as revenue expenditure after 'setting up' of business irrespective of the fact whether revenue is yet earned or not. It was submitted that in the instant case, the real estate development business has not only been set up but also commenced and is in vogue. In this situation, the expenses as claimed are required to be allowed. 9.4 It was further submitted in the alternative that the assessee has filed return of loss for the assessment year 2012-13 in question at Rs. 1,70,06,860/- and therefore, the assessee does not stand to any benefit by wrongly claiming selling expenses at a premature stage and inflate the losse....