TMI Blog2017 (5) TMI 252X X X X Extracts X X X X X X X X Extracts X X X X ..... ding that the assessee during the year has recognized revenue in respect of area of 25,892.22 sq.ft in the year under consideration and the development expenses of ₹ 41,57,264/- claimed in the profit and loss account also pertains to the area sold during the year. This finding of the CIT(A) has also remained uncontroverted by ld D.R. Further, the CIT(A) has relied on the decision in the case of Calcutta Co. Ltd (1959 (5) TMI 3 - SUPREME Court ), wherein, it was held that the assessee claimed estimated expenditure towards development of the plots sold during the year, even though no part of that amount represented any expenditure actually made during the year. It was held that there was a certain and accrued liability and the estimated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessing officer rejected the explanation of the assessee observing that when an expenditure is incurred, then either the assessee should have already made the payment or the same is payable on the last date of the financial year. He observed that the development expenses were shown as payable but was subsequently submitted that it is not payable. If it was not payable then the payment should have already been made. The Assessing Officer further observed that no evidence was produced by the assessee from the cash book or that payment was already made and, therefore, the Assessing Officer disallowed the development expenses of ₹ 41,57,264/- u/s.37 of the Act. 4. On appeal, the CIT(A) held that the assessee was developing a house p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es, the assessee was required to credit work-in-progress account and debit profit and loss account. However, by mistake, the credit was given to payable account. This credit entry was rectified by the assessee in the next year but such rectification does not have any effect on the debit entry, which is actually the item of expenditure claimed by the assessee. He observed that without disputing the debit entry, the Assessing Officer disallowed the expenditure, which was the result of not appreciating the accounting policy properly. He observed that it cannot be denied that the assessee would be incurring the expenses on development of common facilities continuously since beginning and it cannot be said that the expenses reflected in the ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 41,57,264/- made by the Assessing Officer. 5. Ld D.R. relied on the order of the Assessing Officer whereas ld A.R. relied on the order of the CIT(A). 6. We have heard the rival submissions and perused the orders of lower authorities and materials available on record. We find that no specific error in the order of the CIT(A) could be pointed out by ld D.R. in the findings of the CIT(A) that the development expenses of ₹ 41,57,264/- debited to profit and loss account was wrongly credited to payable account instead of crediting it to the work-in-progress account, which was rectified by the assessee in the subsequent accounting year and that it had no effect on the profitability reflected in the profit and loss account. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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