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2023 (10) TMI 970 - AT - Income TaxApportioning of project expenses - Interest, selling and marketing expenses, and other expenses - as per AO 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 - such expenses should have been allowed only to the extent attributable to the revenue offered and the rest amount capitalized to the Work-in-progress - CIT(A) deleted the addition - HELD THAT - CIT(A) deleted the addition made by the AO by transferring the expenses to the work in progress. During the hearing, AR submitted that CIT(A) has noted the facts of some other case. Both sides pointed out that in assessee s own case, for the assessment years 2012-13 and 2013-14 2022 (11) TMI 1409 - ITAT MUMBAI the coordinate bench of the Rustomjee Constructions Private Limited 2023 (4) TMI 1152 - ITAT MUMBAI has restored this issue to 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.
Issues Involved:
1. Deletion of disallowances made by the AO on account of interest cost, selling and marketing expenses, and other expenses. Summary: Issue 1: Deletion of Disallowances Made by the AO The Revenue challenged the order of the learned Commissioner of Income Tax (Appeals)-48, Mumbai ["learned CIT(A)"¯], which deleted the disallowances made by the Assessing Officer (AO) concerning interest cost, selling and marketing expenses, and other expenses for the assessment year 2014-15. The AO had observed that the assessee, engaged in real estate, had not included certain expenses in the Capital Work-in-Progress (WIP) and instead debited them to the profit and loss account as revenue expenditure. The AO transferred these expenses to the Capital WIP and added them to the income of the assessee, arguing that they should be capitalized. The learned CIT(A) allowed the appeal filed by the assessee, following the decision in the case of Rustomjee Evershine JV for the assessment year 2014-15. The CIT(A) found that the treatment of expenses by the assessee was in conformity with Accounting Standards AS 7 and AS 16, and thus, the disallowance made by the AO was against these standards. The CIT(A) noted that similar issues had been decided in favor of the assessee in previous cases, where it was held that such expenses should not be added to WIP but allowed as revenue expenditure. Upon appeal, the Tribunal noted that the learned CIT(A) had not analyzed the applicability of previous decisions to the facts of the present case. Both sides agreed that the issue should be restored to the file of the learned CIT(A) for fresh adjudication. Consequently, the Tribunal set aside the impugned order and restored the matter to the learned CIT(A) for de novo adjudication. Conclusion: The appeal by the Revenue was allowed for statistical purposes, and the matter was remanded to the learned CIT(A) for fresh consideration.
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