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TMI Blog2024 (2) TMI 1165X X X X Extracts X X X X X X X X Extracts X X X X ..... in law, the Order passed by the Learned AO assessing the total income of the Appellant at INR 63,88,750 as against the returned loss of INR 5,10,67,809 in pursuance to the directions given by the Hon'ble Dispute Resolution Panel ('DRP') is bad in law and void ab-initio. 2. That on the facts and in the circumstances of the case and in law, the Hon'ble DRP erred in sustaining the additions/ disallowances of INR 5,12,89,562 made by the Ld. AO on account of advertisement expenses being capital in nature and disregarded the evidences submitted by the Assessee and disallowed the same holding that these are not project expenses done for earning revenue during the year is erroneous and bad in law; 3. That on the facts and in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AY 2014-15, it efiled its return declaring loss of Rs. 5,07,42,314/- on 29.11.2014, later on revised to Rs. 5,10,67,809/-. The case was selected for scrutiny under CASS. Statutory notice(s) issued/served upon the assessee. Necessary details called for were submitted and examined by the Ld. AO. He completed the assessment on total income of Rs. 63,88,750/- in pursuance to the directions given by the Hon'ble Dispute Resolution Panel ("DRP") including therein disallowance of Rs. 5,12,89,562/- on account of advertisement and business promotion expenses and disallowance of Rs. 61,67,000/- on account of brokerage expenses in his order dated 16.11.2018 passed under section 143(3) r.w. section 144C of the Income Tax Act, 1961 (the "Act"). 4. Aggri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g. Since during the year the project was completed only to the extent of 0.14%, the assessee did not book any revenue in its books of account. It is further submitted that the advertisement and brokerage expenses have been claimed by the assessee in the year as these do not relate directly to the project but these do directly relate to the business of the assessee. These expenses have been incurred not for the purpose of the project but for the purpose of marketing and selling of flats. Therefore, these expenses have been debited to the profit and loss account for the year. 7. The Ld. AR relied on the decision of Hon'ble Delhi High Court in CIT vs. Somnath Buildtech Pvt. Ltd. in ITA No. 494/2018 dated 13.10.2022; Gopal Das Estate and Housi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... horities. 12. The observations and findings of the Hon'ble Delhi High Court in Somnath Buildtech Pvt. Ltd. (supra) squarely apply to the facts of the assessee's case. For the sake of ready reference the same is extracted below:- "12. The Revenue in these proceedings admits to the genuineness of the expenditure. There is also no dispute that the Assessee is bound to draw up its Profit and Loss account and balance sheet in compliance with the accounting standards of the ICAL The learned counsel for the Respondent has failed to point out any ground for contending that the Guidance Note issued by ICAI for applying the Accounting Standard (AS-7) is not applicable to the Assessee. The contention of the Revenue that the disallowed expenses are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d be liable for deduction in the hands of the Assessee in wear of sale of the project. The admissibility of the deduction is therefore not denied by Revenue but it is only the year of deduction which is sought to be postponed. It is in these facts the ITAT has held the classification of the expense is revenue neutral. It would be pertinent to note the decision of the Supreme Court on the issue of "revenue neutrality" wherein the Apex Court in the decision of Excel Industries Ltd. (Supra) held as follows: "... 28. Thirdly, the real question concerning us is the year in which the assessee is required to pay tax. There is no dispute that in the subsequent accounting year, the assessee did derive benefits under the advance license and the d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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