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TMI Blog2019 (1) TMI 1536X X X X Extracts X X X X X X X X Extracts X X X X ..... nality granted. In such event, the likely result would be that for next succeeding year, the AO must find himself bound by previous determination and depend upon the balance amount paid. Given the statement in CIT v. Bilahari Investment Pvt. Ltd. [2008 (2) TMI 23 - SUPREME COURT] that adoption of one or more methods and the implementation of it, is largely revenue neutral. This Court is of the opinion that no question of law arises on this aspect. Disallowance under Section 14A - Held that:- Revenue appellate authorities noticed that for the concerned AY, the assessee did not indicate "tax exempt" income to attract the provision. Therefore, the decision in Cheminvest Ltd. v. CIT [2015 (9) TMI 238 - DELHI HIGH COURT] clearly applied which the ITAT followed. No question of law, therefore, arises. Treatment of software expenditure claims - Held that:- The Court is of the opinion that the findings of the CIT(A) and ITAT are pure findings of fact. Moreover, as held by the CIT(A), the AO did not even care to examine the terms of agreement which the assessee entered into with the service provider. As far as the software expenditure goes, the Court is of the opinion that the finding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AXMANN.COM 382. Although the AO had disallowed the expenditure, we notice that the CIT(A) reasoned as follows while accepting the assessee s plea: It is seen that as per para 19 of AS-17, it is mentioned that the selling cost cannot be attributed to contract activity or cannot be allocated to a contract under construction. Even as per AS-2 Valuation of inventory issue by ICAI, it is seen that selling and distribution cost cannot be considered as part of the cost of inventory and such expenses has to recognize in the period in which they are incurred. The cost which can be attributed/allocated over the inventory should comprise all the cost of purchase, cost of conversion and other cost incurred in bringing the inventory to their present location and condition. In the case of construction activities the cost of purchase of land and construction cost can only be attributed over the project. The brokerage expenses are purely a selling cost and cannot form a part of inventory. In view of the accounting standard, the brokerage expenses being a selling cost cannot be capitalized with the cost of inventory and cannot be allocated to the construction activity. It is also seen t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for selling the flats and other properties. There is a nexus between the expenses and services rendered which cannot be spread to several years. The benefit of the brokerage and commission is related to a particular property or flat sold and it cannot be extended to other properties. Therefore, brokerage expenses cannot be postponed for the future years. Therefore, ratio of the said judgment is not applicable in the case of appellant. Further, reliance is placed on the decision of the jurisdictional High Court in the case of Nokia Corporation v. DIT, Delhi 2007 162 Taxman 369 (Delhi), wherein it is held that even if the Department has filed further appeal against the last order, which is in favour of the appellant, the last order is judicially binding on the subordinate authority. Hence, respectfully following the order of the Hon ble Income Tax Appellate Tribunal for AY 1984-85 and the order of CIT(A)-XVIII for the immediately preceding year in one of the group company of the appellant, the addition/disallowance made by the AO amounting to ₹ 6,80,52,340/- on account of brokerage expenses for sale of various properties cannot be sustained. Therefore, the addition/disall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iew of the above facts and following the decision of Coordinate Bench as facts are not distinguished by revenue, we confirm the order of CIT(A) in deleting the addition of ₹ 20,87,70,567/- on account of brokerage expenses for sale of various properties. Therefore, ground no.14 is rejected. 5. In DLF Universal Limited (supra), this Court after framing questions with respect to allowance under brokerage and commission claimed by the assessee in the context of percentage completion method adopted by it held as follows: 8. The assessee had claimed ₹ 61,78,414/- as expenditure towards brokerage and commission. The amount was paid to its brokers for booking and sale of certain properties during the assessment year. The Assessing Officer disallowed this expenditure on the ground that during the year the conveyance of the sale deeds were not executed. The CIT (A) and ITAT accepted the assessee s contentions and set aside the disallowance. At the outset, we notice that the assessee s explanation clearly stated is as follows: - In this connection it is submitted that brokerage and commission is not a direct expenses for acquiring to a specific property but it ..... X X X X Extracts X X X X X X X X Extracts X X X X
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