TaxTMI 
TaxTMI 
2023 (5) TMI 1493
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....e: The assessee is a real estate developer. The assessee filed its return of income for AY 2017-18 declaring total income as Nil. The return of assessee was selected for scrutiny under CASS. In assessment proceedings, the Assessing Officer (AO) inter-alia disallowed following expenditure claimed by the assessee: 1. Advertisement Expenses of Rs. 19,47,928/-; 2. Brokerage & Marketing Expenses of Rs. 4,96,03,997/-. The reason for disallowing aforesaid expenditure by the AO was, since, the assessee has not recognised any revenue from its real estate project during the year, the assessee ought to have capitalised advertisement expenses, brokerage and marketing expenses. Aggrieved by the assessment order dated 24.12.2019, the....
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.... expenditure towards advertisement, brokerage and marketing of the project. The quantum of expenditure has not been doubted by the Assessing Officer (AO). The only reason for disallowing aforesaid expenditure by the AO is that the assessee has not recognised any revenue from real estate project. The Ld. Counsel submitted that during FY 2016-17, the assessee paid total brokerage and marketing expenses of Rs. 4,96,03,997/-. Substantial amount of brokerage Rs. 4,92,11,508/- was paid to Indiabulls Distribution Services (hereinafter referred to as "Indiabulls"). The Ld. Counsel referred to details of brokerage and marketing expense (at page 15 of the paper book). He pointed that brokerage has been paid to Indiabulls in accordance with agreement ....
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....opment. Undisputedly, in the period relevant to the assessment year under appeal, the assessee has not recognised any revenue from real estate business. However, the assessee has claimed advertisement expenses Rs. 19,47,928/- and expenditure towards brokerage and marketing Rs.4,96,03,997/-. The contention of the Revenue is that since, no profit has been recognised from the real estate project in the impugned assessment year, the aforesaid expenditure cannot be allowed as revenue, the assessee ought to have capitalised it. In First Appellate Proceedings, the CIT(A) decided the issue in favour of assessee holding expenditure as revenue allowable u/s 37 of the Act. We are of considered view that the assessee is following project completion met....
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.... estate sector as well as the accepted accounting policies and judicial pronouncements. The assessee had consistently been following the method of valuing its inventory in accordance with AS-2. We find that Accounting Standard 2 (AS 2) provides as under: "Other costs are included in the cost of inventories only to the extent that they are incurred in bringing the inventories to their present location and condition. For example, it may be appropriate to included overheads other than production overheads or the costs of designing products for specific customers in the cost of inventories." Further, Para 13 of the AS-2 provide for some exclusions from the cost of inventories as under: "Exclusions from the Cost of Inv....