TaxTMI 
TaxTMI 
2022 (3) TMI 1016
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....3) of the Act on 31-03-2013. The grounds raised by the revenue read as under: 1. The order of the learned commissioner of Income Tax (Appeals) is contrary to law and facts of the case. 2. The learned CIT(A) has erred in directing the Assessing Officer to delete the disallowance of Rs. 7,64,21,763/-made towards interest cost. 2.1 The ld.CIT (A) having stated that the assessee is following revenue recognition on completion of the project as per AS 9 and project completion method as per AS 7, ought to have appreciated that the assessee had not shown the land under the head "Stock in trade" in the P&L account but disclosed the same under the head "Current Assets" in the balance sheet. 2.2 The ld. CIT (A) has ....
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....duce the evidence as in the absence of the same it could not be immediately ascertained whether the said amount has been offered to tax in the succeeding Financial Year. 4. The learned CIT(A) has erred in directing the Assessing Officer to delete the disallowance of Bad Debts of Rs. 20 lakhs 4.1 The learned ICT(A) has failed to appreciate that no evidence was filed by the assessee either during the course of assessment or during the course of appeal proceedings with regard the fact that the amount of advance was taken into account in computing the total income of the year in which the impugned advance was made so as to become eligible for deduction. 4.2 The learned CIT(A) having held that the amount written off sh....
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....nt assets' for re-sale / development and not as a 'capital asset'. The assessee submitted that Accounting Standard-2 was not applicable since the same would apply for inventories arising under construction contracts. As per Sec.36(1)(iii), interest paid for capital borrowed for the purpose of Business / profession would be allowable as deduction. The interest paid was period cost and allowable in the year of payment itself.However, since there was no matching revenue, the interest was transferred to land cost on pro-rata basis. This method was stated to be consistently followed for past several years. However, Ld. AO held that the assessee was apportioning interest cost without any scientific basis. The Accounting Standard-2 (AS-2) relat....
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....d, the revenue is in further appeal before us. Upon due consideration of material facts, we find that the assessee is engaged in real estate and procure land for business purposes. The interest paid by the assessee has been added on pro-rate basis to various land owned by it. In the year of sale, cost of land including interest has been debited in the Profit & Loss Account. The assessee has consistently followed this method of accounting for various years and the same has been accepted by the revenue. If the interest cost is not allowed to the assessee, the same would never be allowed to the assessee since it is not the case of Ld. AO that the assessee is claiming double deduction of interest expenditure. It could also be seen that inter....
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....e owners, the amount was paid to the original agreement holder to cancel their right. However, the project did not materialize and hence the amount paid by the assessee was claimed as project expenses. The expenses were incurred in the regular course of business of property development. Another pertinent fact brought to the notice was that the assessee took steps to collect the amount from the owners and succeeded in realizing the same. The same was offered to tax in AY 2011-12. Concurring with assessee's submissions, Ld. CIT(A) deleted the disallowance. Aggrieved the revenue is in further appeal before us. We find that the amount was paid by the assessee in the regular course of its business to settle the claim of the earlier develop....