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2015 (1) TMI 1105 - AT - Income TaxPrior period expenses disallowed - Held that:- addition made by the Assessing Officer is not justified because prior period income reported by the assessee at ₹ 9,44,601/- is more than prior period expenses of ₹ 9,11,259/-. The Assessing Officer has wrongly made addition of ₹ 18,52,518/- by adding both the amount of prior period income and expenditure and excluding net prior period income of ₹ 33,342/- offered to tax by the assessee. Even if the entire amount of prior period expenses of ₹ 9,11,259/- is excluded then also the addition can be made of only ₹ 9,11,259/- being difference between prior period income of ₹ 9,44,601/- and ₹ 33,342/-. - Decided in favour of assessee. Depreciation on temporary sheds - treat the cost of construction as deferred revenue expenditure and to estimate the life of project and life of temporary constructions at approximately 13 years - Held that:- The first item is of ₹ 1,52,100/-, being cost of boundary wall and leveling charges. As per the detail, the boundary wall is of barbed wire and it includes the expenditure of ₹ 31,150/- on account of leveling of new store compound. In our considered opinion, such an expenditure is purely temporary in nature. The second item is of ₹ 25,000/- on account of fixing of shed. As per the bill, labour charges is paid on account of fixing of nut bolt for a shed using old materials. In our considered opinion, this is also temporary in nature. The third item is dismantling of old shed of ₹ 46,000/-. This item, in our considered opinion is allowable in full as Revenue expenditure. The 4th item is expenses of ₹ 1,05,300/- on account of earth filling. In our considered opinion, this expenditure is also allowable as Revenue expenditure in full. The next item is of ₹ 50,000/- incurred on account of cost of shifting of old store. In our considered opinion, this expenditure is also allowable as Revenue expenditure. The last item is of ₹ 9,750/- on account of labour charges for doing misc. work. In our considered opinion, as per above discussion, the entire expenses incurred by the assessee is allowable in full in the present year and hence, we delete these disallowances. - Decided in favour of assesse. Centage receivable on work in progress not reflected in the books of account - disallowance @12.5% on the closing work-in-progress without reducing it by opening work-in-progress - Held that:- Unless it is established by the assessee that closing WIP includes opening WIP also, no exclusion can be made of opening WIP from closing WIP because there is completion of work also in the present year and if opening WIP has been completed in the present year and income is accounted for on such completion of project and closing WIP is for the present year only then no such exclusion of opening WIP from closing WIP is called for. In the absence of any such details having been provided by the assessee to establish that some portion of closing WIP is including opening WIP also, the assessee cannot get any benefit on this account also. Hence, on this issue, we do not find any reason to interfere in the order of CIT(A) in the light of above discussion. - Decided against assessee.
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