9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (1) TMI 17 - AT - Income TaxDisallowance of expenses incurred for the project after 15.04.2008 - assessee has booked total expenditure incurred for the project @76.46% for the current financial year and the balance expenses representing 23.54% has been allocated to Work-in-progress - Held that - Once the project has been complete in all respect and the authorities have issued Occupancy Certificate on being satisfied with the completion of the work then the assessee cannot claim that it has incurred such a huge expenditure for carrying out further work in the project. Although the assessee claimed to have incurred various expenditure like POP work installation of grills 13, 37, 447/- between 16.04.2008 and 10.06.2008 i.e. the date of partial Occupancy Certificate obtained from the competent authority. The assessee claims that it has filed necessary evidence before the Assessing Officer to justify those expenses. We find that although the assessee has obtained completion certificate from its Architect on 15.04.2008 what is relevant is the completion certificate obtained from the competent authority i.e. CIDCO on 10.06.2008. Therefore whatever expenditure has been incurred between 16.04.2008 and 10.06.2008 needs to be allowed if the assessee substantiated incurring various expenses for the work stated to be carried out in the project. Hence we direct the AO to call for necessary enquiries in the light of the claim along with necessary evidence and if the Assessing Officer find that the assessee has substantiated expenses incurred with necessary evidences then the Assessing Officer is directed to allow the expenses incurred between 16.04.2008 and 10.06.2008 of 13, 37, 447/. Disallowance of interest - Held that - Once the Assessing Officer has accepted the fact that interest has been paid after deducting applicable TDS then there is no reason for the Assessing Officer to disallow interest paid for the current financial year. CIT(A) after considering the relevant facts has directed the Assessing Officer to verify whether interest for the year has been really paid or only provision has been made in the books of account. We do not concur with the findings of the CIT(A) in so far as A.Y. 2009-10 is concerned for the reason that the treatment of interest in the books of account is irrelevant whether the same has been paid or provided in the books of account. What is relevant is the assessee has paid interest after deducting necessary TDS applicable as per law. In this case the lower authorities have not disputed the fact that the assessee has paid interest after deducting applicable TDS. We are of the considered view that the Assessing Officer has erred in disallowing interest for A.Y. 2009-10 and hence we direct him to allow interest paid for A.Y. 2009-10. Disallowance of expenses incurred by the Director on behalf of the company - Held that - AO has disallowed expenses incurred by the Director on behalf of the company without assigning any reasons and concluded that the assessee has not filed any details in respect thereof. But it is the claim of the assessee that it has filed necessary details in respect of expenditure incurred by the Director and reimbursed by the company. The facts are contradicting each other. Therefore we are of the considered view that the issue needs to be re-examined by the Assessing Officer in the light of claim of the assessee. Hence we set aside the issue to the file of the Assessing Officer and direct him to call necessary inquiries and take decision in accordance with law. Reduction of certain expenses from Work-in-progress while completing the income tax assessment for A.Y. 2010-11 - AO has disallowed certain expenses on the basis of project completion ratio as per which it has disallowed 76.46% of expense for the current financial year and remaining 24.54% has been reduced from Work-in-progress - Held that - AO has disallowed expenses pertaining to the project completed during the current year and balance amount has been directed to be reduced from the Work-in-progress. No doubt the AO has disallowed certain expenses for current financial year for the reasons stated in the assessment order but giving directions to reduce the remaining part of expenses while completing the assessment for A.Y. 2010-11 is beyond the scope of the Assessing Officer. Whether a particular expense is allowable or not and it needs to be excluded from the value of Work-in-progress has to be decided while completing assessment for A.Y. 2010-11. Therefore we are of the considered view that the Assessing Officer erred in giving directions to reduce remaining part of the expenses from Work-in-progress while completing assessment for A.Y. 2010-11. Hence we set aside the direction given by the Assessing Officer for A.Y. 2010-11. - Appeal filed by the assessee is partly allowed for statistical purpose.
Issues Involved:
1. Disallowance of construction expenses incurred after 15.04.2008. 2. Disallowance of interest on loans for previous financial years. 3. Disallowance of expenses incurred by the Director on behalf of the company. 4. Reduction of certain expenses from Work-in-progress for A.Y. 2010-11. Detailed Analysis: 1. Disallowance of Construction Expenses Incurred After 15.04.2008: The assessee claimed construction expenses of ?22,91,738/- incurred after 15.04.2008, arguing these were necessary for completing additional works requested by occupants. The Assessing Officer (AO) disallowed these expenses, asserting the project was complete as of 15.04.2008, supported by a completion certificate from the architect and a Part Occupancy Certificate from CIDCO dated 10.06.2008. The CIT(A) upheld this disallowance, reasoning that no further expenses were justified post-completion certificate. The Tribunal found merit in the assessee's alternative claim for expenses incurred between 16.04.2008 and 10.06.2008, directing the AO to verify and allow these expenses if substantiated with evidence. 2. Disallowance of Interest on Loans for Previous Financial Years: The assessee had not provided interest for F.Ys. 2005-06 and 2006-07, citing inadequate profits, but later paid interest retrospectively in F.Y. 2008-09. The AO disallowed this interest, arguing the assessee should have provided for it in the respective years under the mercantile system of accounting. The CIT(A) concurred, stating the assessee cannot retrospectively adjust interest to reduce taxable income. The Tribunal upheld the disallowance for prior years but directed the AO to allow interest for A.Y. 2009-10 if it was paid after deducting necessary TDS. 3. Disallowance of Expenses Incurred by the Director on Behalf of the Company: The AO disallowed these expenses due to lack of evidence proving they were incurred wholly and exclusively for business purposes. The assessee contended that the Director incurred these expenses for business-related travel and other activities, submitting relevant details. The Tribunal found the facts contradictory and remanded the issue back to the AO for re-examination with necessary inquiries and evidence. 4. Reduction of Certain Expenses from Work-in-progress for A.Y. 2010-11: The AO disallowed certain expenses for the current year and directed the remaining portion to be reduced from Work-in-progress for A.Y. 2010-11. The assessee argued the AO had no authority to give directions for a subsequent year not under assessment. The Tribunal agreed, stating the AO's directions for A.Y. 2010-11 were beyond his scope. However, the AO was permitted to take necessary steps under the law for A.Y. 2010-11. Conclusion: The Tribunal partly allowed the appeal for statistical purposes, directing the AO to verify and allow specific expenses and interest for A.Y. 2009-10 if substantiated with evidence, and remanding the issue of Director-incurred expenses for re-examination. The AO's directions for A.Y. 2010-11 were set aside.
|
