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2014 (6) TMI 226 - HC - Income TaxCapitalization of expenses for project – real estate project - development of a residential colony - project yet to commence - Held that:- They were/are engaged in the real estate development business and had undertaken development of the project - It has to be examined whether the expenditure incurred on development of the project should be taxed by applying Accounting Standard No.7 and in case, the said Accounting Standard has not been followed, the effect thereof has to be ascertained and considered - The exercise has not been undertaken in the case - Tribunal in the order without dwelling on the aspect, held that the expenditure was capital, as corresponding income from the project was not recorded or brought to tax – the matter should be remitted to the AO for a fresh adjudication as to whether other expenses can be allowed as expenditure, in accordance with law, i.e. Accounting Standard as applicable, read with Section 145/145A of the Act – Decided in favour of Assessee.
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