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2012 (8) TMI 594 - AT - Income TaxInterest expenditure on borrowed funds - assessee engaged in the business of construction and development following “completed contract method” - Revenue contended that interest identifiable with the project should be allowed only in the year when the project is completed and the income from that project is offered for taxation - Held that:- Since the assessee follows project completion method and recognises revenue on completion of contract method and all costs relatable to individual project is shown as work in progress, therefore, interest attributable to the project should be allowed only in that year when the project is completed and the income from that project is offered for taxation. In present case, since only 1 project is completed, matter is restored to the file of the AO to determine and allow the proportionate interest attributable to the said project completed. Dis-allowance of development charges and extra payments - Revenue contended that same will be allowable only against the particular project in respect of which the same has been incurred and not as overhead expenses - AY 08-09 - Held that:- It is undisputed that plot in question for which the expenditure has been incurred was sold during AY 2006- 07 and no provision what so ever has been provided for future obligation on account of sale of the said property. Transaction has been completed and profit has already been booked during AY 2006-07. Hence, in absence of any legal or contractual obligation to incur any further expenditure the said expenses cannot be allowed as a revenue expenditure during the impugned assessment year. Dis-allowance u/s 40(a)(ia) on account of non-deduction of TDS from Audit fees - Held that:- Though assessee contended that TDS on audit fees was made on the basis of the bills issued by the Auditors subsequently, however, no proof for this has been produced by the assessee either before the AO or before the CIT(A) and even before us. Hence, dis-allowance upheld.
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