TaxTMI 
TaxTMI 
2025 (3) TMI 646
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....h on facts and in law in confirming the disallowance of Rs. 3,18,63,611/- made by the AO on account of Commission expenses claimed by the assessee. (ii) That the disallowance has been confirmed arbitrarily rejecting the detailed explanation and evidences brought on record by the assessee in this regard. 3. (i) On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the disallowance of Rs. 63,44,468/- made by the AO on account of selling and Promotion expenses claimed by the assessee (ii) That the disallowance has been confirmed arbitrarily rejecting the detailed explanation and evidences brought on record by the assessee in this regard. 4. (i) On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the disallowance of Rs. 55,00,000/- made by the AO on account of Loan Processing fees claimed by the assessee treating the same as capital in nature. (ii) That the abovesaid disallowance has been confirmed ignoring the detailed submissions and explanation brought on record by the assessee to explain that the expenditure claimed is re....
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....d general administrative cost are required to be excluded from the contract costs while preparing the financial statements. 6. The Ld. Counsel has also stated that issue of ground No 2&3 are squarely covered by the decision of the coordinate bench of the tribunal in the case of M/s Hiranandani Palace Gardens P. Ltd. Mumbai Vs the Assistant commissioner of Income Tax (OSD) Mumbai 2015(12) TMI 1649- ITAT Mumbai. Reliance has also placed on the following decisions: i. ASSISTANT COMMISSIONER OF INCOME TAX -3 (2) (2), MUMBAI VERSUS PALACE GARDENS CHENNAI SEZ PRIVATE LIMI TED, 2019 (1) TMI 929 ITAT MUMBAI, Dated, July 4, 2018 ii. SUNNY VISTA REALTORS PVT. LTD. VERSUS THE ACIT, CIR. 3 (3), MUMBAI, 2017 (2) TMI 954, ITAT MUMBAI iii. M/S. LODHA PALAZZO, MUMBAI VERSUS ACIT, 15 (1), MUMBAI, 2014 (12) TMI 1272, ITAT MUMBAI iv. M/S. HIRANANDANI PALACE GARDENS P. LTD., MUMBAI VERSUS THE ASSISTANT COMMISSIONER OF INCOME TAX (OSD), MUMBAI, 2015 (12) TMI 1649, ITAT MUMBAI v. M/S. MACROTECH CONSNTRUCTION PVT. LTD. VERSUS ACIT, CIRCLE 6 (3) AND CENTRAL CIRCLE 42, MUMBAI, 2019 (4) TMI 259, ITAT MUMBAI vi. M/S PRAGNYA CREST PROPERTIES PVT. LTD., ....
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....r or other production costs; (b) storage costs, unless those costs are necessary in the production proc before a further production stage; (c) administrative overheads that do not contribute to bring inventories to their present location and condition; and (d) selling costs." 7. The Ld. Counsel has further relied upon para 2.4 of the "Guidance Note on Accounting for Real Es Transaction issued by the Institute of the Chartered Accountants wherein it has been stated that "The following cost should not be considered part of construction cost and development cost if are material: (a) General administration costs; Selling cost; (b) Research and development cost; (c) Depreciation of idle plant and equipment; (e) Cost of unconsumed or uninstalled material delivered at site; and (f) Payment made to sub-contractors in advance of work performed." 8. The Ld. Counsel therefore has stated that as per the above guidelines, the administrative and selling expenses have been specifically excluded from the cost of inventory for work for closing WIP. The Counsel has further submitted that even as per AS -7 vide paragraph 19 it ha....
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....enditure identifiable with the project. In assessee's case, dispute is not with respect to interest as the assessee itself has added the interest cost to the work-in-progress and claimed it in subsequent year in the proportion of revenue offered. Thus, the facts in assessee's case are quite distinguishable and the decision of Special Bench (supra) is not applicable to the facts of the assessee's case 10. The Id. DR on the other hand has relied upon the findings of the lower authorities. He has stressed that the Ld. CIT(A) has rightly appropriated the indirect expenses to the WIP in proportion to the percentage of completion in respect of the area sold. 11. We have considered rival contentions and carefully gone through the orders of the authorities below. The percentage completion method of accounting has been regularly followed by the assessee. In the succeeding assessment year 2010-11, the AO has accepted the deductibility of the identical nature of expenses in the assessment order passed u/s 143(3) of the I.T. Act. We agree with contention of the Ld. Counsel for the assessee that the employee cost refers to salary paid to the employees who are looki....
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....ing. In view of the above discussion of the matter and following the above decision of the Tribunal for the sake of consistency, this issue is decided in favour of the assessee." 9. We find that in the facts and circumstances of the case in hand the decision of Hon'ble ITAT in case of M/s Hiranandani Palace Gardens P. Ltd. Mumbai Vs. the Assistant commissioner of Income Tax (OSD) Mumbai is squarely applicable. The grounds No.2 and 3 taken by the assessee are decided in the favour of the assessee and addition /disallowances made by the AO and confirmed by the Ld. CIT(A) on account of commission paid on sale of Flat bookings Rs. 3,18,63,611/-and disallowance of expenses incurred on selling and promotions Rs. 63,44,468/- are deleted. 10. Ground no 4: Disallowance of loan processing fee of Rs 55,00,000/- by treating the same as capital in nature? 11. The Ld. Counsel for assessee company has stated that loan processing fee is one time processing fees and same has been incurred for getting the finance business operations and does not provide any enduring benefit to the assessee and same must be allowed as revenue expenditure. Reliance has placed the decision of DCIT Circle -11 (....