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TMI Blog2019 (9) TMI 858X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee in the earlier years also and the same stand was taken by the assessee during the year under consideration. There is no reason for the ld AO to take a divergent stand with regard to the treatment of expenditure given by the assessee in the books which is similar to treatment for income tax purposes also. In any case, we find that these administrative expenses, even if transferred to capital work in progress, would eventually find its way to the profit and loss account in the year of completion of project , in view of the fact that the revenue had not doubted the genuineness of incurrence of those expenditure and the business nexus of the same. Lower authorities had not appreciated the action of the assessee wherein the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee is engaged in the business of real estate development of hotel, retail, mall, information technology park and other high quality commercial segments and had filed the return of income for the Asst Year 2010-11 on 10.9.2010 declaring total loss of ₹ 1,08,35,377/- for the current year. During the year under consideration, the assessee s commercial project at Benguluru was under progress and accordingly, the expenditure incurred towards the said project were capitalized to capital work in progress by the assessee. But there are certain administrative and general expenditure which were incurred by the assessee which cannot be attributed to the commercial project as such and accordingly the same were charged off by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Internal Audit and Tax Audit fees 5 Project support fees (non-technical) 41,35,560 Administrative charges, HR Accounting, Finance. Payroll, taxation etc. 6 Travelling and conveyance 11,56,447 Routine travel and related expenses 7 Communication costs 37,713 Telephone charges 8 Repairs and maintenance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n other words, it was pleaded that the aforesaid expenditure are routine administrative expenses and are to be incurred irrespective of the completion of the project by the assessee. We find from the perusal of the balance sheet that the assessee had already considered , the cost of land, material and contractual payments, technical professional fees, rates taxes for the project, travelling expenses for the project, technical project support fees, interest etc aggregating to ₹ 187 crores, to the capital work in progress as they are directly related to the construction of project. This was done in accordance with the mandate prescribed in Accounting Standards (AS-7) issued by Institute of Chartered Accountants of Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wherein the routine administrative expenses that are not directly connected with the project, need to be charged off as revenue expenditure. Hence we direct the ld AO to grant deduction of the revenue expenditure in the sum of ₹ 1,09,84,625/- that were debited to profit and loss account by the assessee. Accordingly, the Ground No. 1 raised by the assessee is allowed. 4. In view of our aforesaid decision, the adjudication of Ground No. 2 becomes academic in nature as it would not have any bearing on the computation of total income of the assessee for the year under consideration. Accordingly, the Ground No. 2 on merits is left open and is hereby dismissed as being academic in nature. 5. In the result, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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