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2022 (12) TMI 736 - AT - Income TaxDisallowance towards ‘Project Development cost written off’ by the assessee - year of deductibility - AO is of view was that such expenditure could not be allowed as deduction by writing it off during the year under consideration - HELD THAT:- AO in the present case, going with the amount of expenses incurred in earlier years, has decided that the project ought to have been written off in earlier year. Even though the assessee incurred 93% of the project costs in earlier years, it can be seen that it incurred further costs of Rs.16.63 lakh on the project in the immediately preceding year, which divulges that the project was still going on up to the end of the preceding year. It was only in the current year that the assessee realized that the project cannot be continued and hence wrote off the costs incurred on it. In our considered opinion, no exception can be taken to the assessee’s point of view of deciding the year in which the project became unviable so as to write off the revenue costs incurred on it. As the assessee found the project to be lost and decided to write it off, it is this year in which the write off has to be allowed. In view of the fact that the revenue nature of the costs incurred has not been disputed by the AO, we hold that the assessee is entitled to deduction of Rs.7.15 crore in the current year. The impugned order is overturned pro tanto to this extent. Appeal is allowed.
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