TMI Blog2014 (9) TMI 20X X X X Extracts X X X X X X X X Extracts X X X X ..... ute and is not projected as bogus or fictitious in nature - the AO did not follow or apply AS-7 for computing the income and has not commented why AS-2 applied by the assessee was not applicable – the amount had to be carried forward and taken into consideration in the next year etc. - Details for assessment of the next year are not on record though opportunity was granted to Revenue to place the details – Decided against Revenue. - ITA 410/2014 - - - Dated:- 26-8-2014 - Sanjiv Khanna And V. Kameswar Rao,JJ. For the Appellant : Ms. Suruchi Aggarwal, Sr. Standing Counsel For the Respondent : Through ORDER Sanjiv Khanna, J (Oral) 1. This appeal by the Revenue under Section 260A of the Income Tax Act, 1961 ( Act , ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Private Limited, D-601, Central Park 1, Golf Course Road Sector-42, Gurgaon, Haryana Sub: Assessment Year 2009-10 Dear Sir, In the above mentioned case, we further here with the following Details/Information:- In the case of the assessee the requirements of AS-7 Construction Contracts does not apply to the company as it is not applicable to accounting for construction contracts in the financial statements of contractors. The company is undertaking construction on its own account and therefore will treat construction of building as inventory under AS-2 Valuation of Inventories . We enclose herewith the extracts of commentaries of accounting standards and their treatment in financial statements for your perusal. Theref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 of AS -7, also excludes selling costs from contract costs. Para 19, of AS -7 is reproduced as under:- Costs that cannot be attributed to contract activity or cannot be allocated to a contract. Such cost included: 5) General administration costs. 6) Selling Costs. 7) Research Development Costs. 8) Depreciation of idle plant and equipment that is not used on a particular contract. Therefore in view of above, selling and distribution costs such as advertisement cannot be carried as cost of inventory and are to be amortized immediately in the Profit Loss Account. Without prejudice to our above submissions, and to avoid litigation we would like submit to that if the department deems fit, advertisement costs of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... menced. The contention of the assessee that Accounting Standard 7 was not applicable at the said stage was specifically raised in the letter written by the respondent-assessee to the Assessing Officer but has not been dealt with in the assessment order. The Assessing Officer also did not invoke and compute the income of respondent assessee by applying Accounting Standard 7 or hold that the assessee was wrong in applying Accounting Standard 2 in the present case. Income was not computed by the Assessing Officer by applying Accounting Standard 7. 5. Commissioner of Income Tax (Appeals) and Income Tax Appellate Tribunal have both decided the issue in favour of respondentassessee. 6. In the findings recorded by them are that the responden ..... X X X X Extracts X X X X X X X X Extracts X X X X
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