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2010 (2) TMI 848 - AT - Income TaxDisallowance of interest - business of development of power projects - assessee is incurring expenditure and the same has been shown in the Balance Sheet as advances recoverable - assessee in its computation of income has claimed the same as revenue expenditure - Held that:- no infirmity in the order of the CIT(A) in holding that the entire expenditure claimed inclusive of the expenditure which has been subjected to disallowance would have to be treated as work-in-progress and as and when if a project does come to a financial closure and the revenue is realised by the assessee, the necessary expenditure will be allocated on a pro-rata basis depending on the volume of revenue and other financial parameters. Disallowance of proportionate interest paid - held that:- the cost which has been incurred by the assessee on the project in the year under consideration is nothing else but the work-in-progress of the project since during the year under consideration there was not even a confirmed party for which the project was being carried out. Therefore, we agree with the findings of the CIT(A) that the correct treatment would have been to treat the entire interest expenses as work-in-progress and the prorata disallowances made during the year have to be actually be made for the following year. Disallowance of salary and other expenses - According to the Assessing Officer the original return was filed after enclosing audited accounts. Therefore, the plea that certain changes were made during the course of audit was not acceptable. - held that:- there is no dispute to the fact that there is a difference of Rs.32,46,000 on account of expenses in the original return as well as in the revised return. - no evidence could be produced by the learned counsel for the assessee to substantiate the genuineness of such increase in the expenses - decided against the assessee.
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