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2014 (2) TMI 578 - AT - Income TaxDeletion made on excess cost claimed on sales made - Admission of additional evidences – Held that:- There is no finding of the assessing officer that any of the information regarding financial statement or books of account was no provided by the assessee - it is wrong to consider the calculation as additional evidences - The CIT(A) has to his satisfaction, verified the calculations which he found has correct – there was no merit in the arguments of revenue that verification of computation of allocation of cost, which has not been done by the AO is not within the jurisdiction of the CIT(A) – Decided against Revenue. Deletion made on proportionate cost of area sold – Held that:- The assessee started booking sale of certain units of which possessions have been handed over to customers - the assessee made a systematic estimation of cost still to be incurred which is very near to the expenditure actually incurred at the later stage - the amount of cost still to be incurred for the units of which sale has been booked should be reduced in computing the Profit realizable from sale of those units - The assessee has made a reasonable estimate of entire cost and its proportion to the units already sold - The expenditure finally incurred is higher than the estimate made by the assessee – there was no infirmity in the order passed by the CIT(A) – Decided against Revenue. Deletion of amount including interest cost – Held that:- The books of accounts of the assessee are audited and the Auditor has not given any adverse comment for not following the accounting standards which are mandatory for a company u/s 211 of the Companies Act, 1956 - the inventory of land cannot be valued at a price higher than it is bought - the AS-16 does not allow capitalisation of interest cost alongwith the cost of land - the purchase of inventory is continuation of the same business activity in routine course and cannot be termed as extension of the business activity - The proviso has been inserted to disentitle claim of interest on funds borrowed for acquisition of capital assets for the period upto the asset is put to use - purchase and holding of inventory item itself is a business activity - In absence of this proviso, section 36(1)(iii) earlier entitled assessees to claim interest in respect of capital assets, even for the period during which they were under construction - thus, the interest on funds borrowed to purchase land which is part of inventory of the assessee company is an allowable deduction u/s 36(1)(iii) – Decided against Revenue.
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