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2019 (5) TMI 1066 - DELHI HIGH COURTAllowable business expenditure u/s 37 - advertisements and business proportion as ‘indirect revenue expenditure’ - project completion method for recognition of revenue - AO taking all the selling and market expenses to WIP as project had been completed to an extent of less than 30%, the revenue receipts were shown as advance from customers under the head ‘current liability’ - CIT-A agreed with the Assessee by following the guidance note of ICAI as regards accounts of real estate transactions and held that the AO was in error in taking all the selling and market expenses to work in progress - HELD THAT:- Test adopted by the CIT (A) was the right one. Further, the guidance note of the ICAI which lays down the accounting standards to be followed in such circumstances has been correctly applied, both by the CIT (A) as well as the ITAT. These are purely indirect not related to the cost of the project and therefore, same could not have been taken the project as workin- progress. Such an advertisement expenditure on account of brand promotion advertisement, etc are indirect revenue expenditure which are otherwise allowable as business expense u/s 37 (1). As per the . guidance note of accounting for real estate issued by lCAI, selling cost is not included in the cost of construction and development and since it is an indirect cost, therefore, it has to be allowed irrespective of any link with the construction of work in-progress. - Decided against revenue
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