TaxTMI 
TaxTMI 
2023 (11) TMI 756
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....following substantial questions of law, which read as under: "(i) Whether on the facts and in the circumstances of the case and in law, the Hon'ble ITAT is justified in quashing the order of the Pr.CIT passed u/s. 263 and remarking that decision of AO cannot be treated as erroneous and prejudicial to the interest of revenue even if it has resulted in loss to the revenue? (ii) Whether on the facts and in the circumstances of the case and in law, the Hon'ble ITAT erred in observing that the Ld. PCIT was not empowered and entitled to revise assessment order u/s. 263 of the Act r/w. Explanation 2 thereto by ignoring the fact that the Assessing Officer has passed the assessment order without making inquiries / verification as t....
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..... 45,22,435/- under the head 'direct expenses' in the Profit and Loss Account as well as in the ITR. As per section 37(1) of the Act, any expenditure not being expenditure of the nature described in section 30 to 36 and not being in the nature of capital expenditure or personal expenses of the assessee, laid out or expended wholly and exclusively for the purpose of the business or profession shall be allowed in computing the income chargeable under the head Profits and Gains from Business or Profession. Since, the provision for construction expenditure is an un-ascertainable liability and is not allowable u/s. 37(1) of the Act, the above expenditure allowed by the AO in the assessment order is not in order. 2.3 Considering the reply of t....
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...., made with reliable estimate and as per accrual system of accounting, should be allowed or not? We note that as per accrual system of accounting, the assessee makes various provisions for expenses/incomes at the end of the financial year. ..... 12. ......It is undisputed fact that assessee made provision for construction expenses to the tune of Rs. 45,22,435/- and these expenses were debited in profit and loss account. The assessee made payment of these expenses at Rs. 45,22,435/- in the next financial year. The provision for construction expenses so made by the assessee has been reversed in next financial year, that is, the assessee has not claimed these expenses in next financial year. Hence, we note that assessee has made provi....
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....as paid to M/s. Swastik Infrastructures for rendering the project management services for the project undertaken by us. Copy of bills of the same are enclosed herewith under annexure-3.iii." 2.6 What therefore was evident is that during the assessment proceedings, these expenses have been examined and scrutinized and question was asked by the Assessing Officer and the assessee has replied to the Assessing Officer. The assessee has submitted its reply stating that provision for construction expenditures (Flat Sale) of Rs. 45,22,435/- represent the proportionate expenditure apportioned to the units sold and this expenditure has been really paid in the subsequent financial year 2017-18. Therefore, these are the real expenses for which the a....