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2018 (9) TMI 952 - AT - Income TaxComputation of work-in-progress - non rejection of books of accounts - whether where the books of account of the assessee were audited and the said audited books of account have not been rejected, can the addition or disallowance be made in the hands of assessee, on the basis of any reference made to the DVO - Held that:- Applying the said ratio laid down by the Hon'ble Supreme Court in Sargam Cinema Vs. CIT (2009 (10) TMI 569 - SUPREME COURT OF INDIA) to the facts of the present case, we hold that where the Assessing Officer has failed to reject the books of account of assessee, then no reference could be made to the DVO for verifying the cost incurred for the project ‘The Mall’. The assessee in any case had debited the said expenditure to the head ‘Work-in-progress’, which has to be set off against the income in later years. There is no merit in the order of Assessing Officer in disallowing the said expenditure as not allowable. CIT(A) has erred in directing the Assessing Officer to verify the genuineness of expenditure once again in the year in which the impugned expenditure was set off against income recognized, if any. Such an action is not warranted, since it is based on the report of the DVO, for which reference was made without rejecting books of account. Accordingly, we reverse the finding of CIT(A). The grounds of appeal raised by the assessee are thus, allowed.
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