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2022 (7) TMI 997 - AT - Income TaxAddition w.r. to Advertisement, Consultancy expenses classified as other expenses - As transpired that the assessee claimed expenditure whereas there was no revenue from operations and the construction activity was going on - assessee defended the claim on the ground that all direct costs of constructions activity have been classified as construction cost whereas indirect costs not specifically allocable to any specific project have been debited to Profit & Loss Account - HELD THAT:- As observed that the assessee is following percentage of completion method of accounting to recognize the revenue under the project. Since the project has not commenced, the assessee has capitalized the direct costs. However, indirect costs which are in the nature of selling costs and professional costs could not be attributed to any specific project and it is a period cost. The applicable guidance note issued by ICAI mandate the assessee to claim the same as period cost and the assessee has followed the same treatment. The action of the assessee is in consonance with the mandatory guidance note and therefore, the same could not be faulted with.
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