Taxpayer Denied Expense Deductions Due to Unreported Income; Must Classify Project Costs as Work-in-Progress.

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....Disallowing the expenses on the reasoning that corresponding income was not offered to tax - matching principles of the accounting treatment - part of the activity of the project which has been completed after incurring such expenses, the same should be classified as work-in progress and the same should not be claimed as deduction in pursuance to the principles of matching concept. - However, the assessee should be allowed deduction on the enhanced income on account of the disallowance of the expenses as discussed above. - AT....