TaxTMI 
TaxTMI 
2022 (10) TMI 1043
X X X X Extracts X X X X
X X X X Extracts X X X X
....rising out of Covid-19 Pandemic, we condone the delay in both the appeals and admit the appeals for adjudication on merits. 3. The impugned order is common order for both the years which has been passed by learned Commissioner of Income Tax (Appeals)- 6, Chennai [CIT(A)] on 13-03-2020. The assessment for AY 2013-14 has been framed by Ld. Assessing Officer (AO) u/s 143(3) on 31.12.2015. The grounds raised by the Revenue read as under: (a) Whether on the facts and circumstances of the case, the CIT(A) is right in deleting Rs.4,03,86,928/- for AY 2013-14 (deferred revenue expenditure) which is getting claimed by the assessee over and above the actual project expenses amount already considered in purchase (Sl. No.6 of P&L) item of ROI as explained above para F to K. (b) Whether on the facts and circumstances of the case, the CIT(A) is right in deleting Rs.1,21,81,827/- for AY 2013-14 (other expenses), without appreciating the fact that other expenses consist of Advertisement expenses, Deputation charges etc. which are directly relatable to the construction projects, hence, liable to be taken into the value of Stock as per AS7 percentage completion method or corresp....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ication of percentage of completion method would not arise. There is no concept of deferred revenue expenditure and the expenditure has to be either revenue or capital in nature. Accordingly, the expenditure could not be allowed to the assessee. Finally, the deferred revenue expenditure, depreciation and other expenses aggregating to Rs.532.87 Lacs were disallowed. Appellate Proceedings 6. The assessee submitted that expenditure incurred are to be claimed in the years in which it is actually incurred and income is to be offered in the year of receipt. The Ld. CIT(A), relied upon the decision of Hon'ble Supreme Court in Madras Industrial Investment Corn. Ltd. vs CIT (225 ITR 802) wherein it was held that ordinarily revenue expenditure which is incurred wholly and exclusively for the purpose of business must be allowed in its entirety in the year in which it is incurred and could not be spread over number of years even if the assessee has written it off in his books of accounts. Reliance was also placed on the decision of Hon'ble Delhi High Court in CIT vs. Dhoomketu Builders & Development Pvt. Ltd. (3 Taxmann.com 18). Finally, this issue was decided in assessee's favor. Aggrie....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the fact that the assessee is following percentage of completion method of accounting. Therefore, we direct Ld. AO to allow capitalization of Rs.277.70 Lacs as well as Rs.45.90 Lacs as debited in the Profit & Loss Account as 'other expenses'. No other ground has been urged before us. Facts being pari-materia the same, we direct Ld. AO to verify the expenditure incurred by the assessee and allow capitalization of the same. The revenue's appeal stands partly allowed. Revenue's Appeal for AY 2014-15 8. In this year, the assessee has reflected business receipts of Rs.27.41 Crores. The assessee following method of accounting as followed in earlier years, disallowed project expenses written-off for Rs.21.39 Crores but claimed deduction of deferred revenue expenditure for Rs.25.94 Crores. This adjustment was denied by Ld. AO and profit was taken to be Rs.1.94 Crores as reflected in the Profit & Loss Account which was adjusted for further additions and disallowances. The adjudication of Ld. CIT(A) is common for AYs 2013-14 and 2014-15 and accordingly, this issue was decided in assessee's favor. Aggrieved, the revenue is in further appeal before us. 9. Since we have allowed capi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....im was disallowed by the assessing officer as it was not satisfied the criteria laid down under section 36(2) of the Act, after having found that money lending and banking are not the principal activities of the assessee and they made the advance of surplus funds available with it for earning interest and they could not recover the principal and hence, the same was written off as irrecoverable. It was further noted by the assessing officer that the advances are transactions on capital account and therefore, the loss suffered by the assessee is capital loss which is neither admissible under section 36(1)(vii) nor under section 37(1) of the Act. The order of the assessing officer was confirmed by the CIT(A), on the premise that putting surplus money as inter corporate deposit for earning of interest cannot be said to be incidental to business or during ordinary course of business and hence, the loss of investment by way of deposits by the appellant, cannot be claimed as revenue loss. The said order of the CIT(A) was also affirmed by the Tribunal in the further appeal filed by the appellant/assessee, by observing that if the provision written back is the excess provision than the mone....