TMI Blog2023 (10) TMI 970X X X X Extracts X X X X X X X X Extracts X X X X ..... the file of the learned CIT(A) for de novo adjudication. Accordingly, both sides agreed that the issue arising in the present appeal be also restored to the file of learned CIT(A) for a fresh adjudication. Therefore, in view of the above, we set aside the impugned order and restore the matter to the file of the learned CIT(A) for de novo adjudication. As a result, the sole ground raised by the Revenue is allowed for statistical purposes. - SHRI AMARJIT SINGH, ACCOUNTANT MEMBER AND SHRI SANDEEP SINGH KARHAIL, JUDICIAL MEMBER For the Assessee by : Shri Naresh Kumar For the Revenue by : Shri Biswanath Das ORDER PER SANDEEP SINGH KARHAIL, J.M. The present appeal has been filed by the Revenue challenging the impugned order dated 01/03/2023, passed under section 250 of the Income Tax Act, 1961 ( the Act ) by the learned Commissioner of Income Tax (Appeals)-48, Mumbai [ learned CIT(A) ], for the assessment year 2014-15. 2. In this appeal, the Revenue has raised the following ground:- 1. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred by deleting the disallowances made by the AO without appreciating that such expen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ainst which it has claimed interest expenditure to the extent of Rs. 1,38,73,523. The assessee further submitted that the selling and marketing expenses and other cost relates to the regular office administrative and selling expenses pertains to day-to-day business activities and does not directly relate to any project of the company. Accordingly, such expenses do not form part of the construction cost or the work in progress. 5. The Assessing Officer ( AO ) vide order dated 24/12/2016, passed under section 143(3) of the Act did not agree with the submissions of the assessee and held that inspite of several opportunities, the assessee has not submitted the details of interest expenditure based on the projects and completion of the individual project. The AO further held that the finance cost has a direct nexus with the specific projects and once the interest is attributable to the project, the same is allowable as business expenditure in the ratio of revenue offered from the project. As regards selling and marketing expenses and other expenses, the AO held that since these expenses are directly attributable to projects, the same are allowable to be debited to the cost of constru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been claimed only in the ratio of percentage of project completed. Further I also agree with the working in respect of corporate office interest, which is in respect of the business as a whole and can not be attributed to a particular project and therefore should be allowed infull. However I am unable to agree in respect of project Lanward, Landward TMC and HDH Project. Since the works of these projects had not started and no revenue as such has been offered, in my considered view entire interest in respect of these projects is to be taken to closing WIP. This issue has been examined by me in the case of the assessee for A.Y 2013-14 and the facts of the present case are identical. Now the eligible interest would work out to Rs. 43,46,59,203-1,79,130/- 39,38,583/- 27,33,842/- = 42,78,07,648/-, as per table below: Project Revenue Recognized during the year Finance Cost Debited to P L A/c Proportionate Interest income offered to tax Net finance cost debited to P L account %age of project completed Allowable interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 69,62,10,355 22,36,89,787 47,25,20,568 427807648 6.8 Therefore the amount of interest to be disallowed works out to Rs. 4,47,12,920 (47,25,20,568/--42,78,07,648/-), which is confirmed and rest of the expenditure is allowed, following my own order in the case of the assessee for A.Y. 2014-15. The AO is directed to do the same. 6.9 The ld.AR in this regard also relied upon various decisions of my ld. Predecessors, which are discussed as below:- 6.10. The CIT(A) 36, vide order dated 28.02.2017 in case of M/s. Rustomjee Buildcon Pvt. Ltd., A.Y. 2012-13 in the identical circumstances allowed the claim of the assessee in nature of interest by observing as under I have carefully considered the submissions of the appellant vis- -vis assessment order. On perusal of the same, I find that the A.O. has disallowed expenses amounting to Rs. 4,97,38,505/- by holding that the same are require to be added to the WIP of the Project. On the other hand, I find that the Appellant is following Percentage Completion Method for purpose of Accounting. It is further contended by the Appellant that the Project is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f ICAI supports their case. The Appellant further submitted that in such a scenario that the administrative expenses need to be charged off to Profit Loss Account. I also find that the Appellant submitted guidance note on completion method issued by ICAI while presenting their case during proceedings. Apart from this, the Appellant also submitted the breakup of Revenue recognized for 4 years, sample copies of invoices, break up of costs for 4 years, value of sale deeds executed and documents to support expenses. However, the A.O. reiterated his earlier stand in remand proceedings as well. I have also perused detailed submissions dated 23.05.2017 and find that the treatment given by the Appellant is in conformity with the AS 7 AS 16. I, therefore, find that the disallowance made by the A.O. is against the said Accounting Standards. Moreover, the documentary evidences produced during the Remand Proceedings also advanced the case of the Appellant. After considering stage of completion, facts of the case and the case laws relied upon by the Appellant, all favouring the treatment adopted by the Appellant for Construction Accounting. Moreover, by capitalization there is no loss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of Rs. 69,61,27,650/- as interest made by the AO, an amount of Rs. 4,47,12,920/- is confirmed and balance is directed to be deleted. Consequently, ground no 1 is partly allowed 7. As the issue remain identical in the present year too, it is held that the A.O. is not justified in making addition of Rs. 16,91,76,790/- on account of interest and other expenses and transferred to work in progress (WIP). Hence, the impugned addition is deleted. The A.O. is directed accordingly. Being aggrieved, the Revenue is in appeal before us. 7. We have considered the submissions of both sides and perused the material available on record. From the impugned order, it is evident that in the facts of the decisions relied upon by the learned CIT(A), the project was on the verge of completion and therefore addition of expenses to the WIP was held to be not justified. However, without analysing the applicability of these decisions to the facts of the present case, we find that the learned CIT(A) deleted the addition made by the AO by transferring the expenses to the work in progress. During the hearing, the learned Authorised Representative submitted that in para 2.2 of the impugned order, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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