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2017 (11) TMI 2006 - AT - Income TaxNature of expenditure - advertisement expenses, business promotion, brokerage and commission and software developing charges - revenue or capital expenditure - HELD THAT:- The facts are that the assessee is developing a project and for which the assessee has incurred the cost of the project on the land and its development charges. The same have been capitalized as work in progress by the assessee. Certain expenditure such as advertisement expenditure, brokerage expenditure, business promotion expenditure and software development charges were not capitalized by the assessee, but claimed as revenue expenditure. The guidance has been provided by the Institute of chartered accountants of India for accounting in case of real estate projects. These guidelines are undisputedly applicable to the facts of the case before us. None of the expenditure incurred by the assessee were not found to be not genuine. Looking from the another angle about the expenditure claimed by the assessee, it would be apparent that if the assessee follows the completed contract method, then the assessee would be carrying on the cost of the project for the period till the project is sold. Naturally the cost of the project would be increased by these amounts and the revenue is duty bound to grant the deduction of this cost of project at the time of sale. Therefore in that particular scenario, the amount of expenditure incurred by the assessee would be allowed to the assessee is a deduction in that particular year. If the deduction is allowed to the assessee during this year and the assessee has incurred loss assessee is duty bound to set of this loss within a specified number of assessment year specified under section 72 of the Income Tax Act, i.e. 8 years. If the assessee cannot set of these losses during that particular period then the assessee forgoes the tax advantage of claim of the loss. Therefore, even if the expenditure is allowed to the assessee for this year as deduction, it does not make the case of the revenue at any disadvantageous position, in fact, it puts assessee into some disadvantage On the identical facts and circumstances of the case, the coordinate bench in case [2016 (11) TMI 709 - ITAT MUMBAI] for assessment year 2008-09 has allowed the claim of the assessee for deduction under section 37 (1) on account of advertisement expenses, brokerage expenses. Therefore, respectfully following the decision of the coordinate bench we also allow the claim of the assessee with respect to the deduction of advertisement expenses, business promotion expenses, brokerage and commission and software development charges. Furthermore, we do not find any infirmity in the order of the Ld. CIT (A), hence, we confirm the same and direct the Ld. assessing officer to delete the addition - ground in the appeal of the revenue is dismissed.
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