Interest Expense Disallowed for Unfinished Real Estate Project 'B' Lacking Revenue Recognition under Percentage Completion Method.

Disallowance of proportionate interest expenditure - capital attributable to project ‘B’ i.e. unfinished project - This interest expenditure disallowed was not related to borrowing for maintaining business infrastructure but it was related to specific real estate project. As no significant risks and rewards of ownership of the project ‘B’ were transferred by the assessee to prospective buyer, no revenue from said buyer was recognized following principle of percentage completion method. Thus, no liability in respect of interest expenses pertaining to project ‘B’ was accrued, hence it is not allowable in the year under consideration. - AT .....

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