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TMI Blog2022 (7) TMI 997X X X X Extracts X X X X X X X X Extracts X X X X ..... he project has not commenced, the assessee has capitalized the direct costs. However, indirect costs which are in the nature of selling costs and professional costs could not be attributed to any specific project and it is a period cost. The applicable guidance note issued by ICAI mandate the assessee to claim the same as period cost and the assessee has followed the same treatment. The action of the assessee is in consonance with the mandatory guidance note and therefore, the same could not be faulted with. - ITA No. 3491/Chny/2019 - - - Dated:- 6-7-2022 - HON BLE SHRI V. DURGA RAO , JUDICIAL MEMBER AND HON BLE SHRI MANOJ KUMAR AGGARWAL , AM For the Appellant : Reddy Prakash , C. A. , Ld. AR For the Respondents : A. R. V. Sr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s either represented a loss or a selling cost not relatable directly to expresses of any particular project, on the contrary in this case of assessee as explained in the assessment order the expenses were directly related to a construction project ECR-14 for which no revenue has been offered, hence the facts of the relied upon case law is different than the present case of assessee? 4. Whether on fact and circumstances of the case and in law, the Ld. CIT(A) was right in deleting the addition w.r. to Advertisement. Consultancy expenses classified as other expenses by considering it as general administrative and selling cost as per the decision in the case of Vardhaman Developers Ltd. Vs. 110 [2015] 55 taxmtan.com 370 (Mumbai Tribunal), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been classified as construction cost whereas indirect costs not specifically allocable to any specific project have been debited to Profit Loss Account. Indirect costs are mandatory and necessary cost for the purpose of business though they may not fall under the ambit of construction cost. The said treatment was stated to be in accordance with ICDS-III as introduced by the legislatures. However, observing that aforesaid standards were applicable only from AY 2017-18, the expenditure thus claimed by the assessee was disallowed and loss was reduced to that extent. 3. During appellate proceedings, the assessee submitted that as per guidance note on Accounting for Real Estate Transactions as issued by the Institute of Chartered Accountan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d selling cost and that they are not to be included in the project cost, for computation of percentage of completion. The appellant has also rested on various judicial decisions which declare that once the business has commenced, the expenditure incurred wholly and exclusively for the purpose of business has to be allowed whether or not the appellant was having any income during the year. In the case of Vardhaman Developers Ltd. vs. ITO [2015] 55 taxmann.com 370 (Mumbai-Trib) it was held that expenses such as advertisement, sponsorship and brand-building expenses are only in the nature of selling costs of the construction business which would not therefore stand to be capitalised in as much as the same could only be in respect of a direct c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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