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2025 (2) TMI 1076 - AT - Income TaxAddition made being 8% of gross receipts as per provisions of section 28 - assessee did not produce books of accounts and in absence of documentary evidence to verify bills/vouchers and TDS etc. and the variations between the 26AS and P L A/c gross receipts the impugned estimation @ 8% made by the AO common in line of construction activities - HELD THAT - The assessee was allowed to construct highway and on completion of the work the assessee is allowed to collect the amount by way of Toll. Therefore till the completion of the national high way the assessee could not receive any sum in his hands and as such it is not a capital work-in-progress in the hands of the assessee as no asset is owned by the assessee in it s name. The capital asset infrastructure facility belongs to the NHAI and the amount is payable by the NHAI to the assessee. NHAI instead of making payment to the assessee it has facilitated the assessee to open the toll gate on completion of the work and recover the amount. Therefore till such time the amount will be retained as business asset in the books of the assessee and the said amount actually cannot be considered as a capital work-in-progress but represents the work in progress of the assessee or deferred revenue expenditure of the assessee and would be debited to the P L A/c proportionately during the period of operation of the toll gate. AO s presumption that it has to be treated as capital work-in-progress is not correct. We find force in the submissions of the assessee to the effect that the matter in issue in the instant appeal is squarely covered by the aforesaid CBDT Circular dated 23.04.2014. Assessee has shown only the matching entries in the P L A/c and not derived any income for the impugned assessment year. As rightly noted by the CIT(A) when there is no income accrued in the hands of the assessee then there is no question of estimation of income @ 8% out of total gross receipts in the hands of assessee does not arise. Addition u/s 40(a)(ia) - addition being 30% of expenses for non-depositing of TDS before due date - CIT(A) noted that the assessee has capitalized all the expenses incurred in construction of high-way and no expenses are claimed during the impugned assessment year - HELD THAT - As the assessee has not claimed the revenue expenditure and it is settled position of law that when no expenses debited to the P L A/c and no deduction claimed by the assessee under the head profits and gains of business or profession then no disallowance can be made by invoking the provisions of sec.40(a)(ia) of the Act. Disallowance u/sec.43B - It is settled position of law that expenditure can be disallowed only if it is claimed by the assessee. If there is no claim of expenditure then there should not be any disallowance. CIT(A) noted that the impugned expenses though incurred by the assessee but are not charged to P L A/c account as all these expenses are transferred to work-in-progress account and no expenses are claimed. No infirmity in the order of CIT(A) in deleting the addition made u/sec.43B.
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