TaxTMI 
TaxTMI 
2021 (4) TMI 1308
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....) erred in deleting the addition of Rs. 4,39,49,000/- made by the Assessing Officer u/s 36(I)(iii) and capitalized the same to work in progress. 2. Whether on the facts and circumstances of the case and in law, the Ld CIT(A) erred in deleting the addition of Rs. 4,39,49,000/- relied upon the decision of the judgment of the jurisdictional High Court in the case of Lokhandwala Construction Inds Ltd 260 ITR 579 the same were rendered before the proviso to section 36(I)(iii) has been inserted vide Finance Act 2003 3. Whether on the facts and circumstances of the case and in law, the Ld CIT(A), is right in directing the AO to allow to set off of brought forwarded losses? 2. We have carefully heard the rival submissions and perused relevant ....
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....t the said claim. 3.3 However, going by Accounting Standard 7 issued by Institute of Chartered Accountants of India (ICAI), Ld. AO opined that expenses directly related to the project were to be debited to cost of project and could be claimed as deduction only in the year in which corresponding income of the project was credited in Books of Accounts and offered to tax. Notably, the assessee allocated all other expenses to work-in-progress except interest. These expenses were also periodic cost and would be allowable as deduction in toto on assessee's logic. Relying upon the decision of Special Bench in the case of M/s Wall Street Construction Limited (102 TTJ 505), which held that interest cost was to be allowed as deduction only in the ye....
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.... Act. 2003 was stated to be applicable only in case the funds were utilized for acquisition of capital assets and not to stock-in-trade as held by Hon'ble Bombay High Court in the case of CIT V/s Lokhandwala Construction Ind. Ltd. (260 ITR 0579). This decision was stated to be followed in subsequent decisions of various tribunals and courts as enumerated in assessee's written submissions and extracted in the impugned order. The case law of Tribunal Special Bench in M/s Wall Street Construction Limited (102 TTJ 505) was stated to be not applicable to the facts of the case. 4.2 The Ld. CIT(A), after noticing the ratio of decisions of Hon'ble Bombay High Court in CIT V/s Lokhandwala Construction Ind. Ltd. (260 ITR 0579), decision of Tribunal ....
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....d (POCM) and therefore the judgment of Wall Street constructions Ltd. is not applicable to this case. The assessee is following percentage completion and offers a part of the revenue every year depending upon the percentage of completion. The funds have been borrowed for the purpose of construction and have gone into the projects of the assessee which are stock in trade and not capital asset of the assessee. Therefore, the amendment brought in the Act with effect from 2003 by way of introducing the proviso to section 36 (1) (iii) also does not affect the facts of the case of the assessee. In view of the binding judgment of the jurisdictional High Court in the case of Lokhandwala constructions and also of the jurisdictional ITAT in the cases....