TaxTMI 
TaxTMI 
2023 (7) TMI 367
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....A.Y. 2012-13) 2. The assessee in the appeal has raised the following substantive grounds of appeal: "1. On the facts and circumstances of the case, the Learned CIT(A) erred in upholding the contention of the Assessing Officer, regarding disallowance of interest of Rs. 7,07,06,250/- claimed in Profit and Loss Account and Capitalizing in Inventory of work-in-progress. 2. On the facts and circumstances of the case, the Learned CIT(A) erred in not appreciating that Accounting Standards are relevant for the preparation of Financial Statement, not for allowability of interest expenses incurred for the purpose of business and allowable Under Section 36(1)(iii) of the Act. 3. That the Learned CIT(A) did not consider th....
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....ssing Officer are also unsustainable on the facts of the case and as per law. 5. That the appellant craves leave to add, amend or alter any of the grounds of the appeal." I.T.A. No. 3153/DEL/2018 (A.Y. 2012-13) 4. Brief facts of the case are that the assessee company is engaged in the business of Real Estate Activity for executing Group Housing Project as a financing partner. For AY 2012-13, it has filed its return of income declaring a loss of Rs. 7,97,95,666/- in the computation of income. Assessment proceedings were initiated against the assessee and the assessment order was passed u/s 143(3) read with Section 144C of the Act dated 23.03.2016. The AO made an addition on account of arm's length adjustment of interest u/s 92....
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.... ground that the assessee has not put to use the business asset and has not recognized the Revenue from the project as income. It further submitted that the assessee company raised 75,00,00,000/- and used the entire amount for the purpose of business as the same has been advanced to JDA Partner Ram Prastha Promoters and Developers Pvt. Ltd. for execution of real asset projects and in the said process no capital has come in existence. Therefore, the finding of the A.O. that the assessee has not recognized revenue in the profit and loss account in the year under consideration cannot be a ground for disallowance of interest claimed as business expenses under the head "income from business". The ld. Counsel further submitted that the assessee c....
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.... addition of Rs. 8,44,36,408/- to the income, after considering overlap of the transfer pricing adjustment u/s 92CA(3) of Rs. 7,07,06,250/-. The Ld. CIT(A) deleted the addition u/s 92CA(3) of Rs. 7,07,06,250/- and sustained the disallowing of interest of Rs. 8,44,36,408/- (wrongly stated as 1,37,30,158/-). 12. The assessee paid a total interest of Rs. 9,37,50,000/- to Decolexus Ltd. on Compulsorily Convertible Debentures of Rs. 75,00,00,000/-. Of this, the assessee capitalized interest of Rs. 93,13,592/- proportionately in work-in-progress on construction activities (as per Schedule of Project Implementation Expenses) and an amount of Rs. 8,44,36,408/- was claimed in Profit and loss Account. 13. It is the specific case of the assessee....
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....t, the issue was whether the expenditure is in accordance with the method of accounting followed by the assessee for revenue recognition. The ld. DRP upheld the action of the AO disallowing interest expenses in the year but allowed the assessee to set off the interest expenses as and when the revenue is recognized for the purposes of taxation. 17. Under the matching concept, revenue and income earned during an accounting period, irrespective of actual cash in-flow, is required to be compared with expenses incurred during the same period, irrespective of actual out-flow of cash. In the instant case, it is an admitted position that the assessee has not offered revenue from the project to tax on the grounds that it is the first year of oper....