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TMI Blog2014 (8) TMI 793X X X X Extracts X X X X X X X X Extracts X X X X ..... to demonstrate that the bore well was put to use during the previous year and the location of the borewell - no material has been placed on record to demonstrate that the bore well was put to use during the year – assessee could not controvert the findings of CIT(A) – there was no reason to interfere with the order of CIT(A) – Decided against Assessee. - I.T. A. No. 2395 /AHD/2012 - - - Dated:- 7-8-2014 - Shri G. C. Gupta And Shri Anil Chaturvedi, A.M.,JJ. For the Appellant : Smt Urvashi Shodhan, A.R. For the Respondent : Smt. Sonia Kumar, Sr. D.R. ORDER Per Shri Anil Chaturvedi,A.M. 1. This appeal is filed by the Assessee against the order of CIT(A)-XV, Ahmedabad dated 08.08.2012 for A.Y. 2007-08. 2. The facts as culled out from the material on record are as under. 3. Assessee is a partnership firm stated to be engaged in the business of developer of land and Civil construction activities. Assessee filed its return of income for A.Y. 07-08 on 31.10.2007 showing total income of ₹ 6,23,020/-. The case was selected for scrutiny and thereafter the assessment was framed u/s. 143(3) vide order dated 18.12.2009 and the total income was dete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... follows mercantile system of accounting then he should claim expenses in the year in which the same are incurred. But, in the case of appellant, A.O. has not appreciated the fact in this regard. The appellant also has not put forward the facts properly. As contended by appellant that the amount was paid to Torrent Power AEC Ltd. for obtaining electricity connection and it is in this regard various payments made in earlier years are treated as advance and only during the previous year such supply of electricity was done hence all these expenses claimed in previous year. It is therefore important to look into the nature of such expenditure before allowing the same. The details furnished by appellant during appellate proceedings are therefore require consideration. The some of important details can be mentioned as follows: (i) Letter dated 7.12.2004 from M/s. The Ahmedabad Electricity Co.Ltd. (Page 18 to 21) of submission-Ill shows that the appellant made an application for supply of electricity for its project 'Radhakishan Villa' , Jaymala Isanpur Ring Road, Nr.Bhagwan Nagar, Isanpur vide application No.Q/04/14744 to Q/04/14784. As per this application being developer a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... han Villa . The P L account of the appellant shows only sales of ₹ 1,29,19,487 in previous year as against sale of ₹ 4,87,70,318 in earlier year but this sale is not identified to which scheme of appellant it belongs. Further, in the balance sheet also under the head current liabilities the Advances from members were shown as ₹ 29,62,000 as on 31.3.2007 as against ₹ 35,82,878 as on 31.3.2006. In the Notes forming part of the accounts under Schedule H of audited financial accounts for previous year it is mentioned that 1.3. Recognition of Revenue:- (a)Revenue in case of completed unit is accounted on completion and sale of unit. (b)Revenue in case of contract is accounted on the basis of percentage of work completed. It is therefore, these expenses have to booked with respect to sale shown (Revenue recognized) from the 'Radhe Kishan Villa' scheme to arrive at proper computation of profit. In the absence of such details, it is not ascertainable that out of total expenditure for 30 service connection how much rate had already effected and how much is there in work in progress. Further it is also not ascertainable whether this expense ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ificate issued by the electricity Inspector. The Aforesaid submission of the Assessee has not been controverted by the Revenue by placing any contrary material on record. Further the genuineness of the payment has not been doubted by Revenue. In view of the aforesaid facts and more so in the light of the certificate issued by Electrical Inspector, we are of the view that the commencement of supply of energy started on 25.01.2007 and therefore the claim of allowance of expenditure in the year under appeal in the case of Assessee needs to be allowed. We accordingly direct the deletion made by the A.O. Thus this ground of Assessee is allowed. 9. Ground no. 3 is with respect to disallowance of ₹ 2,51,072/- on account of borewell expenses. 10. A.O noticed that Assessee had debited ₹ 2,51,072/- as bore well expenses. He noticed that the expenses was incurred in previous year relevant to A.Y. 04-05 and the work of bore well was also completed in that year. He was therefore of the view that the amount pertain to earlier years and since the assessee was following mercantile system of accounting he disallowed the claim of the Assessee. Aggrieved by the order of A.O, Assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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