2022 (2) TMI 696

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..... claimed as deferred revenue expenditure in the books whereas full expenditure has been claimed in the computation of income, is not a correct finding. The perusal of details of other expenses as debited in Profit Loss Account and the details of construction expenses would show that the set of expenditures are altogether different and therefore, it is not a case where the assessee has claimed deferred revenue expenditure. The findings rendered by Ld. AO are not correct. We are convinced with Ld. AR's submissions that since the genuineness of the expenditure is not under question, the capitalization of the same as work-in-progress may be allowed. These submissions find all the more favor in the background of the fact that the assess .....

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..... (Appeals) failed to appreciate that the appellant had set-up the business and ready to carry out the commercial activities. 4. The Commissioner of Income Tax (Appeals) erred in disallowing the period cost of ₹ 2,07,988 without giving proper notice for disallowing the expenditure. As evident the grievance of the assessee stem from the fact that various business expenditure as claimed by the assessee has not been allowed by lower authorities on the ground that the business had not commenced during the year. 2. The Ld. AR, made limited alternative submissions that the business expenditure is genuine and therefore, the same may be allowed to be capitalized during this year. The Ld. DR, on the other hand, submitted that since t .....

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..... receipt. However, rejecting the same, Ld. AO disallowed the expenditure of ₹ 277.70 Lacs as claimed by the assessee. Further, the book loss of ₹ 45.93 Lacs as claimed in the Profit Loss Account would also not be acceptable since there has to be matching of expenditure and income as per Accounting Standard-7. Finally, the loss was determined at ₹ 2.07 Lacs. In the process the net expenditure of ₹ 45.90 Lacs was disallowed but depreciation claim was allowed. 5. During appellate proceedings, it was submitted that the assessee followed percentage of completion method of accounting. However, it was noted by Ld. CIT(A) that according to this method, the assessee was to recognize revenue in proportion to the number of .....

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