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TMI Blog2016 (4) TMI 388X X X X Extracts X X X X X X X X Extracts X X X X ..... erein neither commenced its business during the assessment year in question nor did it incur the expenses in question for setting up any new unit or for extension of its undertaking. The expenses incurred for obtaining feasibility report, on the possibility of setting up projects, etc. is revenue in nature. - Decided in favour of assessee - I.T.A. No. 5870/DEL/2010 - - - Dated:- 8-4-2016 - Shri G. D. Agrawal, Vice President And Smt. Suchitra Kamble, Judicial Member For the Appellant : Sh. P. Dam Kanunjna, Sr. Dr For the Respondent : Sh. Somil Agrawal, Adv ORDER Per Suchitra Kamble, JM This appeal is filed by the Revenue against the order dated 21/09/2010 passed by CIT(A) XVI, New Delhi. 2. The grounds of appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pradhan Mantri Gram Sadak Yojna in the stte of Tripura (Agartala) 348.14 Lacs 2. Consultancy Survey Work (Preparatory work such as soil testing, survey consultancy) ONGC Mumbai 4.63 Lacs 3. Consultancy Survey Work (Preparatory work such as soil testing, survey consultancy) ONGC Delhi 7.27 Lacs 4. Consultancy Survey Work (Preparatory work such as soil testing, survey consultancy) SWM Tejpur 0.75 Lacs 360.79 Lacs 4. The assessee company is carrying out the projects for past many years ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenses towards the payment as piece rate of labour, the CIT(A) relied upon the judgment of the ITAT, Delhi Benches in case of Sudarshan Overseas Ltd. Vs. DCIT (ITA No. 1404/DEL/2004 dated 17.08.2007). 7. The Ld. DR relied upon the Assessment Order and submitted that the Assessing Officer has rightly disallowed the preparatory expenditure to the extent of two third being ₹ 240.52 lacs. As relates to prior period expenses, the Ld. DR submits that the expenditure can be allowed only in the year to which such expenses relate in mercantile system of accounting. The Assessing Officer has given a reasoning in Para 3.6 of the assessment order and in para 5.7 of the assessment order. Thus, the Ld. DR submitted that the CIT(A) failed to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ked income against these expenses only in the year in which these expenses were crystallized and therefore in this case, the crystallization of expenses as well as accrual of income takes place in the same year. In the impugned year also, the assessee credited the income to the tune of ₹ 76.53 lacs against the aforesaid expenses as per details given before the authorities. Thus, in fact and as per law, it is not a case of prior period expenses. It may further be noted that the income of the appellant has been assessed at positive figure in prior years as well as in subsequent years and the taxes have been paid regularly. Under these circumstances, there was no motive or gain with the appellant company to show these expenses in a parti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to Ground No. 3, the CIT (A) has relied on the Sudarshan Overseas decision which is squarely covering the assessee s case. 13. We have perused all the records and heard both the parties. The preparatory expenses are necessity in a construction work and cannot be bifurcated from the actual construction work. Thus, the Ld. DR s contention fails and the said receipt has to be treated as revenue receipts only. The reliance of the Assessing Officer on Section 35D of the Act is not relevant in the present case. Section 35D provides for amortization of certain preliminary expenses incurred by an assessee before commencement of his business or after the commencement of his business but in connection with the extension of the undertaking or se ..... X X X X Extracts X X X X X X X X Extracts X X X X
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