TMI Blog2022 (3) TMI 1016X X X X Extracts X X X X X X X X Extracts X X X X ..... s years and the same has been accepted by the revenue. If the interest cost is not allowed to the assessee, the same would never be allowed to the assessee since it is not the case of Ld. AO that the assessee is claiming double deduction of interest expenditure. It could also be seen that interest cost is a period cost and allowable to the assessee in the year in which it has been incurred - assessee has chosen to claim the same only in the year when the land is sold. Thus, no infirmity could be found in the impugned order, on this issue. The ground thus raised stand dismissed. Disallowance of compensation Paid - joint-owners of this property entered into joint development agreement (JDA) with another entity GHLPL which was unable to p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT) Ld. DR ORDER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. Aforesaid appeal by Revenue for Assessment Year (AY) 2010-11 arises out of the order of learned Commissioner of Income Tax (Appeals)-1, Chennai [CIT(A)] dated 31-07-2015 in the matter of assessment framed by Ld. Assessing Officer [AO] u/s. 143(3) of the Act on 31-03-2013. The grounds raised by the revenue read as under: 1. The order of the learned commissioner of Income Tax (Appeals) is contrary to law and facts of the case. 2. The learned CIT(A) has erred in directing the Assessing Officer to delete the disallowance of ₹ 7,64,21,763/-made towards interest cost. 2.1 The ld.CIT (A) having stated that the assessee is following revenue recognition on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee and was offered to tax in the succeeding Financial Year, has not elaborated the material evidence produced by the assessee in this regard. 3.3 The ld.CIT(A) having powers coexistent and coterminous as that of the Assessing officer ought to have caused the assessee to produce the evidence as in the absence of the same it could not be immediately ascertained whether the said amount has been offered to tax in the succeeding Financial Year. 4. The learned CIT(A) has erred in directing the Assessing Officer to delete the disallowance of Bad Debts of ₹ 20 lakhs 4.1 The learned ICT(A) has failed to appreciate that no evidence was filed by the assessee either during the course of assessment or during the course of appeal proceedin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... luding interest aggregated to ₹ 360.99 Lacs in this year which was debited in the Profit Loss Account. The assessee explained that interest expenditure has been apportioned between the various properties on pro-rata basis and the properties were held as current assets for re-sale / development and not as a capital asset . The assessee submitted that Accounting Standard-2 was not applicable since the same would apply for inventories arising under construction contracts. As per Sec.36(1)(iii), interest paid for capital borrowed for the purpose of Business / profession would be allowable as deduction. The interest paid was period cost and allowable in the year of payment itself.However, since there was no matching revenue, the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egular method of accounting being followed by the assessee. The closing stock valuation as arrived at by the assessee for various properties was tabulated in para 4.2.1 of the order on the basis of which it was concluded that the impugned disallowance was not justified. Aggrieved, the revenue is in further appeal before us. Upon due consideration of material facts, we find that the assessee is engaged in real estate and procure land for business purposes. The interest paid by the assessee has been added on pro-rate basis to various land owned by it. In the year of sale, cost of land including interest has been debited in the Profit Loss Account. The assessee has consistently followed this method of accounting for various years and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but charity and the payment was not supported by the terms of the agreement / MOU. Therefore, the amount of ₹ 200 Lacs was added back to the income of the assessee. During appellate proceedings, it was submitted that since the assessee wanted to develop the property at the instance of the owners, the amount was paid to the original agreement holder to cancel their right. However, the project did not materialize and hence the amount paid by the assessee was claimed as project expenses. The expenses were incurred in the regular course of business of property development. Another pertinent fact brought to the notice was that the assessee took steps to collect the amount from the owners and succeeded in realizing the same. The same was o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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