2020 (9) TMI 184

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....ss loss of the assessee. Brief facts of the case are that assessee is a partnership firm engaged in the business of development and construction of residential/commercial projects. The Assessing Officer, on perusing the Profit & Loss Account, noted that assessee firm has debited various expenses to work-in-progress during the year amounting to Rs. 90,98,858/-. The Assessing Officer was of the opinion that the opening work-in-progress of Rs. 5,71,59,128/- was a capital loss as the assessee has demolished the constructed property. This as per the Assessing Officer was coming out of the assessee's notes on business activity. Hence, Assessing Officer held that such demolished project cannot be part and parcel of work-in-progress. Holding that....

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....ainst approximately 40 required to be provided as per the earlier regulations. These 40 parkings as per earlier plan were proposed to be accommodated in part stilt and open spaces around the building, considering the size of the plot. Again in 2012, the D.C. regulations were also drastically revised by BMC under Notification No. CMS4311/452/CR-58/2011/UD-11 dated 6th January, 2012. The copy of which has already been submitted to your good selves. Under the Revised DC Rules, if the plan for Construction project has been approved for partial development and c.c. issued for part work, then developer has to follow new Regulations under Revised DC Rules for balance construction work. Revised DC Rules has also made Revised parking Rule which ....

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....nstruction of building and the same be a part of work in progress of 6,62,57,986/- as on 31st March, 2013. Hence, opening WIP of Rs. 5,71,59,128/- be allowed as revenue expenditure along with current year revenue expenses." From reading of the above, it is clear that assessee has duly submitted that there are some modification in the plan, that the matter had even-travelled to Hon'ble Bombay High Court, that there was revision in plans and that as a result, various revisions amendments were carried out. The Assessing Officer did not examine the veracity of the claims and submissions of the assessee. 4. The Assessing Officer only inferred from the above that various expenditures incurred on commercial property which were subsequently d....

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....with the project and the expenditure in this regard has to be treated as work-in-progress in as much as assessee is following project completion method. In our considered opinion, on the facts and circumstances of the case, the matter needs to be remitted to the file of Assessing Officer. The Assessing Officer is directed to consider the veracity of assessee's submission with reference to the relevant evidences. If the assessee's submissions regarding the change in rules and other aspects are found to be cogent, then the assessee's claim of work-in-progress and the assessee's following of project completion method have to be examined on the touchstone of Hon'ble Delhi High Court decision in the case of Lunar Electrical (supra) as above.....