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TMI Blog2023 (8) TMI 326X X X X Extracts X X X X X X X X Extracts X X X X ..... he Ld. CIT(A) who vide order dated 19.03.2019 in Appeal No. Del/CIT(A)-5/0292/2016-17, granted substantial relief to the assessee. 3. Aggrieved by the order of the Ld. CIT(A), the Revenue is now in appeal and has raised the following grounds:- 1. The Ld.CIT(A) has erred on facts and in law in allowing the assessee to claim expenses directly in the computation of income, when such expenses had not been claimed by the assessee itself in its audited books of accounts. 2. The Ld. CIT(A) has erred on fact and in law holding that the expenses disallowed y the AO were in the nature of relate to general/normal expenses or/and related to the selling expenses. 3. That the appellant craves leave to add, amend, alter or forgo any grounds of appeal either before or at the time of hearing of the appeal. 4. Before us at the outset Ld. DR submitted that though revenue has raised various ground but all the ground are interlinked and interconnected. 5. During the course of assessment proceedings, AO on perusing the computation of income noticed that assessee had claimed deduction of Rs. 10,32,93,504/- on account of "expenses claimed as per audit report" directly in the computation of inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as admittedly mentioned by the AO that the construction work has been started and the appellant has shown work in progress etc. It has not been brought on record that how these expenses are not related to the business activity of the appellant and disallowable within the meaning of the provisions of sec 37 of the Act. AO disallowed only on the pretext that business not commenced, expenses are not justified and also capitalized in its balance sheet and claimed directly in the computation of income. 9.3 The same issue was also in the case of M/s Logix City developer Pvt. Ltd. for AY 2013-14 and the appeal was party allowed in that case by following the order of my predecessor in the case of Ms Logix City developer Pvt. Ltd. itself for AY 2012-13 wherein the appeal was allowed after detailed discussion, holding that the business has been set up and therefore, the business expenditure claimed by the appellant are allowed. Since there is similarity in the facts of both the cases I do not have anything to differ from the case of M/s Logix City developer Pvt. Ltd. and therefore, considering the said order and relying upon the case laws and arguments mentioned therein, it is held that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant has been set up and therefore, advertisement and brokerage expenses totaling Rs. 5,02,28,267/-(1,31,77,533 + 3,70,50,734) are allowed being revenue in nature as discussed in forgoing paragraphs whereas interest paid to Noida authority are directly related to project therefore, interest of Rs. 5,30,65,237/- is to be capitalized towards work in progress. Therefore, interest paid to Noida authority amounting to Rs. 5,30,65,237/- remained disallowed/confirmed. Out of total disallowance of Rs. 10,32,93,504, Rs. 5,02,28,267/-(1,31,77,533 + 3,70,50,734) is hereby deleted and Rs. 5,30,65,237/- capitalized by the AO is hereby confirmed. These grounds of appeal are partly allowed. 9.9 It has been stated by appellant that above claim of expenses in computation of income have already been capitalized towards project cost in the balance sheet and not routed through profit and loss account, therefore, the amount allowed as revenue expenses, discussed above, should be reduced from capitalized project cost (WIP) while offsetting the value of cost form Sale proceeds in future so that it cannot be allowed twice. 7. Aggrieved by the order of Ld. CIT(A), Revenue is now before us. 8. Before us ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... istration charges: 7. We find that the assessee has claimed the penal interest payable @ 14% annually on the default of payment of installment. The entry reads as under: S. No. Date Name of Party Amount Purpose of Expenditure 1. 3/31/20222 NOIDA Authority (Penal Intt.) payable being penalty @14% annually on interest to NOIDA is recognized with regards to 1st Instalment of default interest. Calculation = 166274471 x 14% x149 days /366 days 94,76,736 Late payment of 1st installment 8. The assessee was allowed 16 half yearly installments to pay the amount of Rs. 302 .31 Cr. to NOIDA and in case of default interest @ 14% compounded half yearly leviable for the default period on the defaulted amount. The balance sheet also reflects cost of land of Rs. 387.25 Cr. which has been capitalized. Since, the interest is attributable to the cost of land, the interest expenditure is not allowable as per Section 36(1)(iii) of the Income Tax Act, 1961. Similarly, the registration charges and the fee/penalty/damages/price for late registration amounts to an integral part of cost of acquisition o f land has also to be allotted to the "cost of project" and to be treated as part of c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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