AI Drafter 
TaxTMI 
TaxTMI 
2024 (1) TMI 152
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 5,17,61,420/- because the applied percentage completion method in assessment order is correct as the "Project Completion Method" was not in existence before 01.04.2003. 2. That the decision of Ld. CIT (A)-1, Agra is not acceptable as the same is against the principles of Accounting Standard adopted by Institute of Chartered Accounts of India. 3. That the assessment order dated 26.12.2016 passed under section 143(3) of the IT Act, 1961 is as per law and addition of Rs. 5,17,61,420/-made by applying the Percentage Completion method is justified. 4. That the appellant craves leaves to add or delete or alter or modify any one or more ground (s) of appeal during the appellate proceedings. 5. That the order of....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... view of AS-7. The assessee has not worked out its profit properly. The assessee has claimed revenue expenses containing following expenses: i. Advertisement expenses 11,08,902/- ii. Brokerage 2,97,532/- iii. Hoarding & Kon. Expenditure 12,42,702/- iv. Gaushala expenses 5,89,824/- v. Other Marketing expenses 2,00,365/- vi. Electricity, Power & Fuel 27,51,990/- vii. Depreciation 13,23,232/- viii. Finance charges (interest etc.) 4,08,98,375/- ix. Salary (Construction) 33,48,498/- Total 5,17,61,420/- Above mentioned expenses may not be allowed as the same is treated to be included in estimated cost of the project, no further revenue expens....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lso relied upon Shri Shyam Sunder Bansal's reply dated 15.02.2014 whereby working of profit has been submitted by him and thereby net profit of Rs. 5.0 crores has been estimated. The impugned addition was however not made by the A.O. by estimating the appellant's net profit at Rs. 5.0 crores on the basis of appellant's working given on 15.02.2014 or on the basis of any shortcoming discovered by him in the book results vis-à-vis that working. It has instead been made by disallowing nine expenses claimed as deduction by the appellant company. According to the Assessing Officer, accounting standard AS-7 has not been followed by the appellant and supporting evidences for the aforesaid expenses could not be produced by it duri....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ounting standard is prescribed by the ICAI in respect of accounting of Construction Contracts and not for the appellant, who is a real-estate developer. Further, if we refer to the table given by the appellant at Paragraph no. 4.3 of its written submission dated 27.12.2017( reproduced above), it is seen that:- • Out of expenses of Rs. 5,17,61,420/- disallowed by the A.O., as much as Rs. 1,96,82,204/- have already been capitalized by the appellant in its books of account, and another Rs. 13,23,232/-, being depreciation expenses, have been added back by the appellant while computing its income chargeable to tax and claimed under the provisions of section 32. Thus, under the facts and circumstances of this case, no additi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....net profit of more than Rs. 5 crores. Similarly, the A.O.'s indirect reliance on Shri Bansal's letter dated 15.02.2014 is unwarranted because the computation of net profit at paragraph no. 7 thereof has not been found to be correct. During the course of the assessment proceedings, the appellant was questioned why the net profit declared in its return of income in accordance with the net profit worked out in the aforesaid letter dated 15.02.2014: Vide its reply dated 19.02.2016 to the A.O.'s query, the appellant had given its explanation which has not been controverted by the A.O. in the assessment order. Relevant extract of appellant's reply dated 19.02.2016 is reproduced below:- "9. The question now is why....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mitted that firstly there are no unusual expenses debited in the books of accounts during post survey period and each and every expenditure is fully verifiable. The expenditure on interest (which is major expenditure) is mainly related to loans availed during pre-survey period and there can be no allegation of inflating any expenditure. We have submitted entire details on record and submit no such inference of inflation of expenses would be found therein. It is therefore, submitted that income cannot be determined on the basis of said letter of Managing Director which is partly based on misconception and wrong estimates, otherwise the book result are in consonance of letter submitted by the Managing Director of the company." After ....