TaxTMI 
TaxTMI 
2025 (6) TMI 217
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....the ld. CIT(A) erred in deleting the disallowance of Rs. 3,77,96,688/- u/s 37(1) of the Act. 3. Briefly stated the facts of the case are that the assessee electronically filed its return of income on 29/10/2018 declaring total income at Rs. (-) 1,53,99,939/-. The return was selected for scrutiny assessment and accordingly statutory notices were issued and served upon the assessee. 4. During the course of scrutiny assessment proceedings, the AO noticed that the assessee has charged following expenses in its profit and loss account:- a. Repair and Maintenance Rs. 22,44,403/- b. Stamp Duty and Registration Rs. 99,000/- c. Travelling Expenses Rs. 22,94,246/- d. Commission and brokerage Rs. 3,25,000/- e. Professi....
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....uffered. This expenditure is independent expenditure as it is not dependent upon the success/outcome of any project. This expenditure has to be incurred till the property is occupied or the agreement is terminated. Therefore, the expenditure needs no capitalization and rather should be treated as revenue expenditure and allowed. Without prejudice to the above, we would also like to state the fact that the project has already started yielding and generating revenue income which is duly offered for taxation in the relevant assessment year, the same can be easily verified and checked from the audited financial statements and therefore your honors contention that expenditure cannot be treated as revenue as no revenue is yielded does no....
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....herewith. d. Repair & Maintenance: The said expenditure are also incurred in relation to the property taken on rent/lease. These are regular type of expenditure which is required by the person who takes the property on rent. Since the property is taken on rent and is used for consistent business purposes any expenditure incurred of the same nature would also be revenue expenditure and should be allowed. Copy of ledger account alongwith relevant supportings are being enclosed herewith. e. Professional Fees: With respect to the said expenditure, your honors has mentioned that since these professionals have helped assessee to get the deal done with DBL and since the projects are under construction and therefore the said expen....
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....zed by the assessee irrespective of quantum offered. The same can be verified from the audited financial statements already submitted before your honors in earlier submissions. Therefore the same is revenue in nature and allowable expenditure. Copy of ledger account alongwith relevant Sample supportings are being enclosed herewith. f. Travelling Expenses: These are expenses incurred as an integral expenditure of any type of business. These expenditures also include expenses incurred by the professionals as covered and duly explained above. Since the professional fees are also a part of revenue expenditure, any expenditure incurred by them are also revenue expenditure. Travelling expenses are always operational in nature and also to....
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....ompleted the assessment by disallowing Rs. 3,77,96,688/-. 7. The assessee carried the matter before the ld. CIT(A) and reiterated its claim of expenditure. The assessee explained that it is a private limited company and is in the business of management, operation and maintenance of road projects. It was further explained that it entered into a binding agreement with M/s. Dilip Buildcon Ltd. for acquiring 24 road projects on Commercial Operational Date (COD) basis. It was explained that COD is the point at which the project starts generating revenue. It was strongly contended that the expenses shall be allowable u/s 37(1) of the Act once the same is incurred wholly and exclusively for the purpose of business except expenses incurred on ca....