TaxTMI 
TaxTMI 
2020 (8) TMI 142
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....einafter in short "Ld.CIT(A)"] dated 03.11.2017 for the A.Ys. 2013-14 and 2014-15. 2. Ground Nos. 1 and 2 of Revenue's appeal for A.Y. 2013-14 and A.Y.2014-15 relates to deletion of disallowance made u/s. 36(1)(iii) of the Act. 3. Ld. Counsel for the assessee, at the outset submits that this issue has been decided in favour of the assessee by the Coordinate Bench of the Tribunal in assessee's own case for the earlier assessment years and both authorities below followed early year's orders while deciding the issue. 4. Ld. DR fairly submitted that the issue has been decided by the Tribunal which has been followed by the Ld.CIT(A). 5. We have heard the rival submissions, perused the orders of the authorities below. We find that the....
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....of a revenue nature - it only the year of allowability that is in dispute. Not its allowability per se i.e. the expenditure is allowable being of a "revenue nature" but in the case of project completion method" it has to be allowed only when the project is complete and revenue/income is recognized by the appellant - i.e. it has to be matched with the corresponding income and when there is no reorganization of income then there can be no allowability of the corresponding expenditure - otherwise it would result in distortion of the matching principle - as held by Hon'ble Bombay High Court in the case of Taparia Tools 260 ITR 102 (Bom) - therefore, since it cannot be linked with the recognization of revenue - in a project completion method - i....
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....he AY 1993-94 onwards. 4. After hearing both the parties, we find that the assessee has been following completed contract method i.e. "project completion method". This method of accounting has been accepted by the Tribunal in AY 1997-98 and 1999-2000 and also the same has been upheld by the Hon'ble Bombay High Court in the earlier years. The assessee has been claiming interest expenses u/s. 36(1)(iii) on payment basis on the loans which are mainly for business and not project specific. The Ld. CIT(A) has directed to restrict the claim of interest to that on the project completion during the relevant previous year and held that it is to be allowed only when the project is complete and revenue/income is recognized by the assessee....
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.... assessee stands allowed." 6. Respectfully following the said order, we sustain the order of the Ld.CIT(A) and reject the grounds raised by the Revenue. 7. Similarly, Ground Nos. 3 and 4 of the revenue's appeals are common for the A.Y. 2013-14 and A.Y. 2014-15 and they relate to partly deleting the disallowance made u/s. 14A r.w. Rule 8D of I.T. Rules. 8. Briefly stated the facts are, the Assessing Officer while completing the assessments for the A.Y. 2013-14 and 2014-15 computed the disallowance u/s. 14A r.w. Rule 8D and made disallowance of interest under Rule 8D(2)(ii) and expenses being 0.5% of average investments under Rule 8D(2)(iii) of I.T. Rules. The Ld.CIT(A) deleted the interest disallowance made under Rule 8D(2)(ii) and ....
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....699/-. Thus, since the assessee was having more surplus funds than the closing value of investments we do not find any infirmity in the order passed by the Ld.CIT(A) in deleting the disallowance under Rule 8D(2)(ii) of I.T. Rules, the same is sustained. 12. Coming to the disallowance under Rule 8D(2)(iii) of I.T. Rules, the Ld.CIT(A) restricted the disallowance to the exempt income earned by the assessee during the year. Ld. Counsel for the assessee before us pleaded that in view of the decision of the Special Bench of Delhi Tribunal in the case of ACIT v. Vireet Investments Private Limited (supra) only those investments which yielded dividend income should be considered for the purpose of computing the disallowance. We direct the Assess....