TaxTMI 
TaxTMI 
2026 (5) TMI 888
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....ade vis-à-vis above ground before us and same is, therefore, dismissed. 4. Ground of appeal No.2 raised by the assessee reads as under: "ITC reversal expense - Rs. 2,13,22,346 2. The learned CIT(A) erred in fact and in law in confirming the action of the learned Assessing Officer, Assessment Unit, Income Tax Department the AO") in disallowing the Input Tax Credit (" ITC") reversal claimed as an expense amounting to Rs. 2,13,22,346." 5. The issue raised in the above ground pertains to disallowing the Input Tax Credit ('ITC') reversal claimed as an expense amounting to Rs. 2,13,32,346/-. 6. Brief facts relating to the issue are that the assessee is engaged in the business of Real Estate activities and as per the provisions of GST Act, the builder is required to make reversal of ITC on completion of project as per Rules 42 & 43 of the CGST Rules. As per the P&L account, the assessee has claimed expense amounting to Rs. 7,10,07,352/- as ITC reverse. The assessee had recognized Revenue following the percentage of completion method in accordance with the accounting policy. The AO held that the expense relating to ITC reversal needed to be amortized in th....
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....4." 7. The Ld. CIT(A) confirmed the order of the AO. 8. Before us, Ld. Counsel for the assessee contended that the authorities below had not properly appreciated the facts relating to the issue. She contended that the assessee had claimed ITC Reversal pertaining to Project No.1 only to the extent of the units completed and booked and had not claimed the entire ITC Reversal as of Rs. 5.28 Crores as believed by the AO and the CIT(A). In this regard, she drew our attention to the working of calculation of closing WIP, which was filed to the authorities below and placed before us at paper book page nos.130 & 131 as under: "12. It is pertinent to mention that the Appellant has accounted for the ITC reversal in accordance with POCM for both projects. The ITC reversal pertaining to Project 2, amounting to Rs. 1,81,73,970, has already been capitalised to WIP. With respect to Project 1, it is submitted that the Appellant has accounted for and claimed the ITC reversal in proportion to the percentage of project completion. It is important to clarify that the Appellant has not claimed the entire ITC reversal amount of Rs. 5,28,43,484, as alleged by the learned AO The proportiona....
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....Reversal as found by the authorities below. In view of the same, the disallowance of Input Credit Reversal of Rs. 5.28 Crore is directed to be deleted. 12. Ground of appeal no.2 is accordingly allowed. 13. Ground of appeal nos.3 & 4 raised by the assessee read as under: "Advances written off- Rs. 10,01,514 3. The learned CIT(A) erred in fact and in law in confirming the action of the learned AO in disallowing the advances written off of Rs. 10,01,514 despite the fact that such advances were given in the normal course of business and non- recoverability of such advances is allowable as trading loss u/s. 28 of the Act. 4. Without prejudice to above, the learned CIT(A) erred in fact and in law in confirming the action of the learned AO in disallowing the advances written off of Rs. 10,01,514 despite the fact that the same being incurred wholly and exclusively for business purposes, is alternatively allowable as revenue expenditure u/s. 37(1) of the Act." 14. The issue relates to the disallowance of claim of written off of advances amounting to Rs. 10,01,514/-. 15. The facts relating to the issue are that the assessee had written off of advance of....
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....with the said parties for which purpose advances were made was brought on record. Therefore, it is clear that the assessee was unable to establish the business nature of the advance and for this reason alone, we agree with the orders of the authorities below that the assessee's claim of write off of the impugned advance was not allowable. However, before us, Ld. Counsel for the assessee has pleaded for an opportunity to be granted to the assessee so as to establish the business nature of the advances. She contended that the assessee was of the belief that having filed ledger account of the party to whom advances were given sufficiently established the business nature of the advances coupled with the fact that the advance was classified as advance for suppliers in the balance sheet of the assessee, which was duly audited by the Auditor. She contended that if given an opportunity the assessee would be able establish the business nature of advance. Considering the same, we consider it fit to restore the issue back to the file of the AO to decide the issue afresh after giving due opportunity of hearing to the assessee to demonstrate the eligibility of its claim to advances written off ....
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....ger account of the social activity expenses where the impugned expenses have been booked and copy of which was placed before us at paper book page no.121. The entire expenses booked therein pertain to charitable activity, Anaj Kit Vitran to Blind People and also includes expenses of Rs. 6,10,500/- paid to Shree Parnatap Institute of CNC Programming. 23. Expenses incurred on charitable activities are not allowable as business expenses. So far as the amount paid to the Institute of CNC Programming is concerned, we have gone through the invoices of the same placed at paper book page no.122 and we find that it relates to training fees of 37 students. The Ld. Counsel for the assessee was unable to demonstrate as to how the impugned expenses had any relation to the business of Real Estate carried out by the assessee. In view of the same, we do not find merit in the contention of the Ld. Counsel for the assessee that expense of Rs. 31,50,611/- were allowable to assessee since the said expenses relate to charitable activities and not incurred for business purpose. Ground Nos. 5 to 7 raised by the assessee are accordingly, dismissed. 24. In the result, appeal of the assessee is partly....