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TMI Blog2021 (9) TMI 1462X X X X Extracts X X X X X X X X Extracts X X X X ..... costs relating to the construction and development of the specific project have to be capitalized. The construction cost includes conversion cost, municipal sanction fee, expenses incurred, site labour cost, cost of material, cost of hiring plant machinery, cost of designs and claims of the third party. The general administrative cost, advertisement, brokerage, selling cost, depreciation of the vehicles and office expenditure are part of the revenue expenditure and need not be capitalized. There is difference between commencement of the business and setting off of the business. All the expenses incurred pre-commencement are to be treated as pre-operative expenses and the expenses incurred which do not form the part of the work in prog ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rely based on two case laws which are clearly distinguishable as explained by the appellant before him. 3. Facts of the case in brief are that the assessee company is engaged in the business of real estate. The return of income was e-filed on 30.09.2013 declaring loss of Rs.2,19,39,670/-. 4. It is a fact on record that the assessee has already capitalized Rs.92.75 crores on account of capital work in progress in addition to an amount of Rs.13.69 crores under preoperative expenses totaling to Rs.106.44 crores. 5. Further, the assessee company has claimed deduction of Rs.2,27,16,104/- on account of expenses deemed to have been revenue in nature. The said expenses are as under: S. No. Particul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss operations, construction is in progress and an amount of Rs.106.44 crores has already been capitalized. Hence, it cannot be said that the assessee has not commenced business operations. The expenses being advertising, brokerage and commission for booking of the flats which is in the nature of revenue expenses cannot be treated as capital expenditure. He relied on the judgment of Hon ble High Court of Bombay in the case of CIT Vs Piem Hotel Pvt. Ltd., 209 ITR 0616 wherein it was held that once business is set up, expenditure incurred relating to such business have to be treated as revenue expenditure and al lowed as deduction. As soon as an activity which is essential to carrying on the business is started the business must be said to hav ..... X X X X Extracts X X X X X X X X Extracts X X X X
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