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2015 (6) TMI 5 - AT - Income TaxAdditional income offered voluntarily - return of income filed in response to notice u/s 153A - at the time of search the assessee had offered to disclose the income on the basis of percentage completion method which has been retracted later on - Held that:- There is no finding that the assessee has been following percentage completion method regularly since beginning or in any other project. There is no such evidence or documents which have been found during the course of search indicating that the assessee had been following percentage completion method regularly. If the assessee has been following one of the recognized methods as prescribed by AS-9, then it cannot be held that the Revenue can impose a different method upon the assessee unless there is a finding of fact that such a method is not reflecting the true profits of the assessee. Now it has also been brought on record by the ld. Counsel that in the subsequent year i.e. in the year of completion of the project in A.Y. 2012-13, the Revenue itself has accepted the project completion method for recognition of revenue and accordingly, has assessed the income of the project on the same method. Thus, a contrary view cannot be taken for this year. - Decided against revenue. Disallowance of interest u/s. 36(1 )(iii) on loans - Held that:- So far as the advance of ₹ 50 lakhs, it is seen from the record that the said amount was given for purchase of plot of land pertaining to Survey No. 187, Hissa 4A, situated at village Kharghar, Taluq Panvel. Since the assessee is the developer of the project, the said land was intended to be purchased for developing the project at PanvelOnce the advance has been given for the purchase of plot of land which is for business purposes then no adverse inference can be drawn so as to disallow the interest on the ground that the same is for non-business purpose. Similarly, the loan to the partnership firm has been in which the partners are common. The said firm too is engaged in the business of developer. Further, from the perusal of the balance sheet as pointed out by the ld. Counsel, it is seen that interest free funds in the form of capital is more than ₹ 2.85 crores, whereas the advance/loan given is only ₹ 82 lakhs and once the assessee had interest free funds, then presumption can be drawn that the same has been given from interest free funds. Also as the assessee has been following ‘project completion method’ and such interest cost have been capitalized in the account, then no disallowance can be made in this year. See CIT v/s Reliance Utilities & Power Ltd [2009 (1) TMI 4 - HIGH COURT BOMBAY] - Decided in favour of assesse. Addition on account of statutory deposits to the total income - Held that:- we do not find any reason to disallow the said amount, because the assessee has debited the same to WIP and if at all any disallowance is called for, then the same will go to reduce from the WIP. It cannot be added to the total income of the assessee during the year. On this ground alone, we do not find any reason to uphold such disallowance - Decided in favour of assesse. Disallowance of professional fees for registration of trademark with logo - revenue v/s capital expenditure - Held that:- As the assessee had contended that this expense has been debited to WIP and, therefore, in view of the reasoning given above, the same cannot be disallowed and added to the income of the assessee for this year, because if at all the disallowance is called for, it will go to reduce the WIP only. Accordingly, the disallowance made in this year cannot be sustained - Decided in favour of assesse.
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