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2020 (4) TMI 224 - ITAT BANGALORENature of expenditure - Allowable Revenue expenditure - selling expenses - whether as part of the project cost and thus capital in nature? - HELD THAT:- The substantive issue for determination is whether the selling expenses incurred by the assessee are allocable to the specific development contract under taken by the assessee and thus required to be added to the contract costs in progress or such expenses can be allowed as revenue expenditure. On perusal, it is noticed that the Accounting Standard -7 issued by ICAI clearly spells out that the selling and administrative cost are required to be excluded from the contract costs while drawing financial statements. Hence, the action of the assessee resonates that the parameters of AS-7 referred to in the instant case. We also find merit in the plea of the assessee that expenses incurred in the normal course of business is required to be allowed, after setting up of business irrespective of the fact whether the revenue is not yet earned in view of the decision in the case of Western India Vegetable products Ltd. [1954 (3) TMI 59 - BOMBAY HIGH COURT]. The action of the assessee in any case is a revenue neutral affair and the revenue is not put to any tax loss per se by such alleged premature claim. The controversy is no longer resintegra and clearly covered by the decision of the co-ordinate Bench of the Tribunal in Sunny Vista Realtors Pt.Ltd. vs ACIT [2017 (2) TMI 954 - ITAT MUMBAI] - In the similarly placed situation, the co-ordinate Bench has adjudicated the issue in favour of the assessee by a detailed order. In parity with the view taken by the co-ordinate Bench and having regard to the tax neutrality, we find considerable merit in the objection raised by the assessee. - Decided in favour of assessee.
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