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2010 (8) TMI 964 - AT - Income TaxDisallowable u/s 40(a)(ia) - expenditure - personal in nature - Method of accounting - HELD THAT:- The assessee in this case is a builders and real estate developer. The A.O’s contention, which is affirmed by the CIT(A) is that AS-7 issued by the ICAI is applicable to the builders and real estate developers. This finding in our opinion is erroneous. AS-7 prior to its revision in the year 2002 dealt with the Accounting for Construction Contracts, in the financial statements of enterprises. Therefore, it is clear from the Expert Committee of the ICAI, that the first appellate authority was not in error in upholding the view taken by the AO, that the revised AS-7 is applicable to builders and real estate developers. As mutually agreed between the parties, we respectfully follow the order of the Tribunal in the case of Savala Associates v. ITO[2009 (10) TMI 640 - ITAT MUMBAI], we set aside the matter to the file of the A.O. on the issue of disallowance u/s 40(a)(ia). As the assessee has not claimed any expenditure, the disallowance does not arise. At the same time, the work-in-progress of the assessee has to be recomputed by excluding this expenditure, which the assessee has not claimed. All the Ground is allowed for statistical purposes.
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