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TMI Blog2016 (12) TMI 176X X X X Extracts X X X X X X X X Extracts X X X X ..... w, these are not prior period expenses but have arisen, accrued and incurred during previous year relevant to impugned assessment year and are wholly and exclusively connected with the project which was already sold in March, 2008 and hence have direct and live nexus with the business carried on by the assessee. Thus, based on our detailed discussion and reasoning as set-out above, we order deletion of the additions as made by the AO and sustained by the learned CIT(A). - Decided in favour of assessee. - I .T.A. No. 4275/Mum/2012 - - - Dated:- 16-11-2016 - SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER For The Assessee : Shri Rajesh B. Gupte For The Revenue : Shri A. Ramachandran ORDER P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee failed furnish any reasons of expenditure that the same are related to its business income earned during the year and pertained to the project shown in last year being cost of sales. The A.O. held that if the expenses under the head cost of sales were genuine and exigible to the project, the assessee should have made provision in the books of account of the last year accordingly. Instead, the assessee has claimed the said expenditure in the profit and loss account without making any provision of expenditure in earlier years. Since these are not related to any of the projects under taken by the assessee (WIP), nor to the income earned during the year i.e. income from other sources, hence the same were not allowable within the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purely towards maintenance and repairing of the project, BMC charges of ₹ 1,14,379/- was paid for new water connection and road opening charges. It was submitted that the water connection is always given after occupancy certificate was issued. There was some minor expenses towards purchase of material which were incurred amounting to ₹ 11,910/-. It was also submitted that in order to carry out these expenses, the assessee had to incur site expense charges towards supervision charges, purchase of sand and bricks, thus it was submitted that none of these expenses were of prior period and the expenses incurred were necessary expenses and which could have been incurred only after completion and handing over of the project. It was s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see should have made provision in the relevant years and in this year the same should have been disclosed as prior period items as per AS-II, but the assessee failed to do so and, hence, in the absence of any project being carried out, the ld. CIT(A) held that the same cannot be claimed in the previous year relevant to the impugned assessment year and accordingly the learned CIT(A) confirmed the assessment order of the A.O. , vide appellate order dated 12.04.2012 passed by learned CIT(A). 6. Aggrieved by the appellate orders dated 12.04.2012 passed by the ld. CIT(A) , the assessee is in appeal before the Tribunal. 7. The ld. Counsel for the assessee submitted that the expenses were incurred after the project was completed and on the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the previous year relevant to the impugned assessment year to rectify those minor defect and deficiencies pointed out by buyers and hence cannot be considered to be prior period expenses as the same were arisen, accrued and incurred in the impugned assessment year and are wholly and exclusively for the purposes of business of the assessee. In our considered view, these are not prior period expenses but have arisen , accrued and incurred during previous year relevant to impugned assessment year and are wholly and exclusively connected with the project which was already sold in March, 2008 and hence have direct and live nexus with the business carried on by the assessee . Thus, based on our detailed discussion and reasoning as set-out abov ..... X X X X Extracts X X X X X X X X Extracts X X X X
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