2010 (6) TMI 780 - AT - Income Tax

Summary

Issues involved: Allocation of indirect expenses against profit from a specific project u/s 80-IB of the Income Tax Act.

Summary:
The appeal pertains to the assessment year 2005-06, where the assessee, engaged in real estate development, declared a profit from the project "Orchid" and claimed deduction u/s 80-IB. The Assessing Officer disallowed certain expenses, attributing 85% of indirect expenses to the Orchid project. The CIT(A) upheld this allocation method. The assessee appealed to the Tribunal, citing a previous order in a similar case where indirect expenses were apportioned based on work in progress. The Tribunal agreed with the assessee, directing the Assessing Officer to verify work in progress figures and allocate indirect expenses accordingly. The appeal was allowed in part.

In conclusion, the Tribunal held that indirect expenses should be apportioned in proportion to the cost incurred on various projects during the year, based on work in progress data, following a previous order. The case was remanded to the Assessing Officer for verification and appropriate allocation of expenses.