TaxTMI 
TaxTMI 
2023 (10) TMI 970
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....e Revenue is against deletion of disallowance on account of interest, selling and marketing expenses, and other expenses. 4. The brief facts of the case pertaining to this issue, as emanating from the record, are: The assessee is engaged in the business of constructing, purchasing, acquiring, hiring, operating, managing, and developing land of any real estate and personal estate property on ownership basis or on Built Own Lease and Transfer basis. For the year under consideration, the assessee filed its return of income on 27/09/2014, declaring a loss of Rs. 3,13,82,352. The assessee subsequently revised the return of income on 17/10/2015, declaring a loss of Rs. 3,13,82,352. The return filed by the assessee was selected for scrutiny and statutory notices under section 143(2) as well as section 142(1) of the Act were issued and served on the assessee. In response to the same, the assessee filed basic details such as a copy of the return, audit report, profit and loss account, balance sheet, and accompanying enclosures. During the assessment proceedings, it was observed that the assessee has shown capital work in progress (WIP) of Rs. 4,48,68,14,710 as on 31/03/2014, and the same ....
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.... AO transferred the aforesaid expenditure aggregating to Rs. 16,91,76,790, to the Capital work in progress and added the same to the income of the assessee. 6. The learned CIT(A), vide impugned order, allowed the appeal filed by the assessee following the decision of its predecessor in the case of Rustomjee Evershine JV for the assessment year 2014-15. The relevant findings of the learned CIT(A), in the impugned order, are reproduced as under:- "DECISION "6. I have carefully perused the fact of the case, the submission of the appellant and the order of the Assessing Officer. It is observed that identical issue came for consideration in the case of Rustomjee Evershine JV in A.Y.2014-15 (Appeal No. CIT(A)-48, Mumbai/10440, 10726 & 10225/2016-17, 2017-18 & 2018-19). Vide order dated 10.05.2022, the undersigned on this issue has followed earlier years' decision in the group cases, in the following manner - "5.7 Identical issue came for consideration before my predecessor Ld. CIT(A) in the case of one of the group concerns, M/s Kapstone Construction Private Limited for AY 2013-14 and 2014-15. In AY 201314, vide order dated 07.07.2020, it is held that: "6.7 I have examined t....
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....L - 50,14,41,113 16,11,11,157 34,03,29,956 - 34,03,29,956 Landward - 2,63,930 84,800 1,79,130 - - Landward TMC Handover - 58,03,096 18,64,513 39,38,583 - - Urbania Infra - - - - - - Health & Commercial - - - - - - Azziano School - - - - - - HDH - 40,28,035 12,94,193 27,33,842 - Azziano ABC 85,45,47,689 - - - - - Total 2,01,41,13,840 69,62,10,355 22,36,89,787 47,25,20,568 427807648 6.8 Therefore the amount of interest to be disallowed works out to Rs. 4,47,12,920 (47,25,20,568/--42,78,07,648/-), which is confirmed and rest of the expenditure is allowed, following my own order in the case of the assessee for A.Y. 2014-15. The AO is directed to do the same. 6.9 The ld.AR in this regard also relied upon various decisions of my ld. Predecessors, which are discussed as below:- 6.10. The CIT(A) 36, vide order dated 28.02.2017 in case of M/s. Rustomjee Buildcon Pvt. Ltd., A.Y. 2012-13 in the identical circumstances allowed the claim of the assessee in nature of interest by observing as under "I have carefully considered the submissions of the appellant vis-à-vis assessment order. On perusa....
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....ppellant is following Percentage Completion Method for purpose of Accounting. It is further contended by the Appellant that the Project is on the verge of completion and therefore adding the impugned expenses to the WIP would not be justified in such circumstances. In fact, the Appellant vehemently contended that the Accounting Standard of ICAI supports their case. The Appellant further submitted that in such a scenario that the administrative expenses need to be charged off to Profit & Loss Account. I also find that the Appellant submitted guidance note on completion method issued by ICAI while presenting their case during proceedings. Apart from this, the Appellant also submitted the breakup of Revenue recognized for 4 years, sample copies of invoices, break up of costs for 4 years, value of sale deeds executed and documents to support expenses. However, the A.O. reiterated his earlier stand in remand proceedings as well. I have also perused detailed submissions dated 23.05.2017 and find that the treatment given by the Appellant is in conformity with the AS 7 & AS 16. I, therefore, find that the disallowance made by the A.O. is against the said Accounting Standards. Moreover, t....
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....he case and the case laws relied upon by the Appellant, all favouring the treatment adopted by the Appellant for Construction Accounting. Moreover, by capitalization there is no loss or profit to the Revenue. Accordingly, the disallowance made by the A.O. of Rs. 3,10,97,295/- is deleted." 6.14 Accordingly, out of the disallowance of Rs. 69,61,27,650/- as interest made by the AO, an amount of Rs. 4,47,12,920/- is confirmed and balance is directed to be deleted. Consequently, ground no 1 is partly allowed" 7. As the issue remain identical in the present year too, it is held that the A.O. is not justified in making addition of Rs. 16,91,76,790/- on account of interest and other expenses and transferred to work in progress (WIP). Hence, the impugned addition is deleted. The A.O. is directed accordingly." Being aggrieved, the Revenue is in appeal before us. 7. We have considered the submissions of both sides and perused the material available on record. From the impugned order, it is evident that in the facts of the decisions relied upon by the learned CIT(A), the project was on the verge of completion and therefore addition of expenses to the WIP was held to be not justified. How....