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TMI Blog2018 (11) TMI 1618X X X X Extracts X X X X X X X X Extracts X X X X ..... owing grounds have been raised:- 1. "On the facts and in the circumstances of the case, the CIT(A) has erred in deleting the addition of Rs. 1,74,168/- made by the AO craves leave to add, alter or amend any/all of the grounds of appeal before or during the course of the hearing of the appeal." 2. The facts in brief are that Assessee Company is in the business of real estate development and during the year it has launched two residential projects at Mohali and has started booking the sale of residential units to the customers. It had booked sale of Rs. 14,65,22,133/- for residential unit sold to 222 customers and also incurred expenditure of Rs. 1,95,98,000/- towards advertisement and business promotion as selling expenses which was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A). Therefore, following the same precedence he deleted the same. 4. As regards the disallowance of expenditure of Rs. 1,72,25,470/- as capital expenditure, Ld. CIT(A) held that, assessee is following 'percentage completion of method' whereby revenue has to be recognised as per the ICAI guidelines when the seller has transferred to the buyer all significant risks and rewards of ownership and the seller retains no effective control of the real estate to a degree usually associated with the ownership. No significant uncertainty exists regarding the amount of the consideration that will derive from the real estate and it is not unreasonable to expect ultimate collection are attracted. In so far as cost is concerned the same should compri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he extent of Rs. 1,72,25,470/- to be part of work-inprogress, because assessee has not disclosed any income from such a project. It is further not in dispute that assessee has not disclosed any income from such a project and that assessee has incurred this expenditure to popularise its project and to get the booking for ultimate sale of the residential units. These are purely indirect expenditure not related to the cost of the project and therefore, same could not have been taken the project as work-in-progress. Such an advertisement expenditure on account of brand promotion advertisement, etc., are indirect revenue expenditure which are otherwise allowable as business expense u/s 37 (1). As per the guidance note of accounting for real esta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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