DCIT 11(1)(1), MUMBAI V. RUSTOMJEE CONSTRUCTION PRIVATE LIMITED , MUMBAI

ITA 6305/MUM/2017

AI Insights

The case involves multiple appeals by the Revenue against the orders of the Ld.CIT(A) concerning three entities of the 'Rustomjee' group for the Assessment Years 2012-13 and 2013-14. The primary issue in dispute was the treatment of certain expenses, including finance costs and other project-related expenses, and whether they should be charged to the Profit & Loss Account as revenue expenditures or added to the Work-in-Progress (WIP) of the projects. The Assessing Officer had disallowed these expenses, adding them to the WIP, while the Ld.CIT(A) had reversed this decision, leading to the Revenue's appeal.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 123340 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-01-2023
• Appeal Filed By: Department
• Order Result: PartlyAllowed
• Bench Allotted: D
• Next Hearing Date: 08-01-2023
• Assessment Year: 2012-2013
• Appeal Filed On: 17-10-2017
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Depreciation; Opportunity of being heard; Additional evidence; Revenue expenditure; Set aside
• Section: 37; 43B; 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “D” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND SHRI SANDEEP SINGH KARHAIL (JUDICIAL MEMBER) I.T.A No.3981/Mum/2017 (Assessment Year 2012-13) The Deputy Commissioner of Income Tax-11(1)(1), Mumbai Room No.204, Aayakar Bhavan, M.K. Road Mumbai-400 020 Vs. M/s Rustomjee Buildcon Pvt. Ltd, 702, Natraj, M.V. Road Junction, Western Express Highway, Andheri (West), Mumbai-400 099 PAN : AAECR 0375 A Appellant Respondent I.T.A No.6305/Mum/2017 - A.Y. 2012-13 I.T.A No.6282/Mum/2017 - A.Y. 2013-14 The Deputy Commissioner of Income Tax-11(1)(1), Mumbai Room No.204, Aayakar Bhavan, M.K. Road Mumbai-400 020 Vs. M/s Rustomjee Constructions Pvt Ltd, 702, Natraj, M.V. Road Junction, Western Express Highway, Andheri (West), Mumbai-400 099 PAN : AADCR 5566 J Appellant Respondent I.T.A No.3982/Mum/2017 - A.Y. 2012-13 I.T.A No.6281/Mum/2017 - A.Y. 2013-14 The Deputy Commissioner of Income Tax-11(1)(1), Mumbai Room No.204, Aayakar Bhavan, M.K. Road Mumbai-400 020 Vs. M/s Rustomjee Realty Pvt Ltd, 702, Natraj, M.V. Road Junction, Western Express Highway, Andheri (West), Mumbai-400 099 PAN : AACCR 9804 N Appellant Assessees by Revenue by Date of Hearing Date of pronouncement PER OM PRAKASH KANT, AM These appeals by the Revenue in respect of three entities of same group, viz. ‘Rustomjee’ are directed against separate orders passed by the Learned Commissioner of Income Mumbai [in short, ‘Ld.CIT(A)] for Assessment Year 2012 case of M/s Rustomjee Buildcon Pvt 2012-13 & 2013-14 in the case of M/s Rustomjee Construction Pvt Ltd and M/s Rustomjee Realty Pvt 2. In all these appeals common issue therefore, these appeals were heard together and are disposed off by way of this consolidated order for repetition of facts. 3. First of all, we take up the appeal of the Revenue in ITA No.3981/Mum/2017 in the case of M/s Rustomjee Buildcon Pvt Ltd for A.Y. 2012-13. The reproduced as under: ITAs 3981, 6305, 6282, 6281 & 3982 Respondent by : Shri Naresh Kumar : Smt. Riddhi Mishra [CIT Date of Hearing : 09/01/2023 Date of pronouncement : 19/01/2023 ORDER PER OM PRAKASH KANT, AM These appeals by the Revenue in respect of three entities of ‘Rustomjee’ are directed against separate orders passed by the Learned Commissioner of Income Mumbai [in short, ‘Ld.CIT(A)] for Assessment Year 2012 case of M/s Rustomjee Buildcon Pvt. Ltd and for Assessment Years in the case of M/s Rustomjee Construction Pvt Ltd and M/s Rustomjee Realty Pvt. Ltd. all these appeals common issue-in-dispute is involved and, therefore, these appeals were heard together and are disposed off by way of this consolidated order for convenience and to avoid First of all, we take up the appeal of the Revenue in ITA No.3981/Mum/2017 in the case of M/s Rustomjee Buildcon Pvt Ltd 13. The effective ground raised by the Revenue are :- Rustomjee group . 3981, 6305, 6282, 6281 & 3982/Mum/2017 2 CIT (DR)] These appeals by the Revenue in respect of three entities of ‘Rustomjee’ are directed against separate orders passed by the Learned Commissioner of Income-tax (Appeals), Mumbai [in short, ‘Ld.CIT(A)] for Assessment Year 2012-13 in the Ltd and for Assessment Years in the case of M/s Rustomjee Construction Pvt. dispute is involved and, therefore, these appeals were heard together and are disposed off by convenience and to avoid First of all, we take up the appeal of the Revenue in ITA No.3981/Mum/2017 in the case of M/s Rustomjee Buildcon Pvt Ltd ground raised by the Revenue are "1. On the facts and in the circumstances of the case and in law, the Ld. CIT (A) erred in deleting the disallowance of expenses of Rs. 4,97,38,505 added to the total work that the assessee failed to establish the nexus between revenue offered and the expenses claimed and closing work substantiate with documentary evidence the direct nexus between the borrowed funds and the project undertaken whi Finance cost debited by the assessee was incurred on borrowed funds which must be meant for specific projects and are directly attributable to the individual/specific projects." 4. Briefly stated, facts was engaged in the business of constructing, purchasing, acquiring, managing and developing real estate projects. For the year under consideration, the assessee filed declaring loss of ₹3,83,15,6 assessee was selected for scrutiny and statutory notice Income-tax Act,1961 (in short ‘the Act’) with. During the course of assessment proceedings, the Assessing Officer noticed construction receipt aggregating to and other receipts aggregating to dividend and miscellaneous income. After debiting various expenses such as construction cost, administrative cost, etc. the assessee reported loss in the return of income at As far as profit from the projects i.e. real estate/construction project is concerned, the assessee was following percentage completion method. debited interest of ₹57,92,865/- to P&L Account and claimed the same as revenue ITAs 3981, 6305, 6282, 6281 & 3982 On the facts and in the circumstances of the case and in law, the Ld. CIT (A) erred in deleting the disallowance of expenses of Rs. 4,97,38,505 added to the total work-in- progress of the project without appreciating the fact failed to establish the nexus between revenue offered and the expenses claimed and closing work- in- progress. Further, the assessee failed to substantiate with documentary evidence the direct nexus between the borrowed funds and the project undertaken which is required to be established as the Finance cost debited by the assessee was incurred on borrowed funds which must be meant for specific projects and are directly attributable to the individual/specific projects." , facts of the case are that the assessee company was engaged in the business of constructing, purchasing, acquiring, managing and developing real estate projects. For the year under consideration, the assessee filed return of income on 20/07/2013 3,83,15,655/-. The return of income filed by the assessee was selected for scrutiny and statutory notice ,1961 (in short ‘the Act’) were issued and complied with. During the course of assessment proceedings, the Assessing construction receipt aggregating to and other receipts aggregating to ₹97,26,533/- dividend and miscellaneous income. After debiting various expenses such as construction cost, administrative cost, etc. the oss in the return of income at As far as profit from the projects i.e. real estate/construction project is concerned, the assessee was following percentage completion method. While working out the loss, the assessee interest of ₹4,39,48,540/- and other expenses of to P&L Account and claimed the same as revenue Rustomjee group . 3981, 6305, 6282, 6281 & 3982/Mum/2017 3 On the facts and in the circumstances of the case and in law, the Ld. CIT (A) erred in deleting the disallowance of expenses of Rs. 4,97,38,505/- progress of the project without appreciating the fact failed to establish the nexus between revenue offered and the progress. Further, the assessee failed to substantiate with documentary evidence the direct nexus between the borrowed ch is required to be established as the Finance cost debited by the assessee was incurred on borrowed funds which must be meant for specific projects and are directly attributable to the re that the assessee company was engaged in the business of constructing, purchasing, acquiring, managing and developing real estate projects. For the year under on 20/07/2013 . The return of income filed by the assessee was selected for scrutiny and statutory notices under the issued and complied with. During the course of assessment proceedings, the Assessing construction receipt aggregating to ₹7,28,00,816/- on account of dividend and miscellaneous income. After debiting various expenses such as construction cost, administrative cost, etc. the oss in the return of income at ₹3,83,15,655/-. As far as profit from the projects i.e. real estate/construction project is concerned, the assessee was following percentage While working out the loss, the assessee and other expenses of to P&L Account and claimed the same as revenue expenditure, whereas according to the Assessing Officer, the interest and other expenses were related and, therefore, same should hav progress’(WIP) of relevant projects. assessee that project during the year had been completed upto 95% and, therefore, all the expenses were debited to the P&L Account and adding to the WIP was not j Accounting Standard interest and other expenses as revenue expenses. The Ld.AO rejected the contention of the assessee and removed the said expenses from P&L Account and in the project. The relevant finding of the Assessing Officer is reproduced as under: “3.4 The submissions made by the assessee has been carefully perused and considered. However, the same is not acceptable. It may be mention inspite of providing two show causes i.e. two opportunities, the assesse has not submitted the details of interest expenditure based on the projects and completion of individual project. The assesse has heavily relied on AS by ICAI for "Constructions Contracts". The asssessee has submitted that in Para 15 of the AS – 7, nowhere it is mentioned about inclusion of finance cost into the Cost of Construction. Hence the same shall not be part of the WIP and is allowable as revenue expend has relied heavily on Para 19 of AS and Selling Cost are to be excluded from the Construction Cost since these costs/expenses cannot be attributed to contract activit a contract. In this regard para 15 and para 19 of AS 7 are discussed as under: Para 15 of the AS Contract Costs should comprise: (a) Costs that relate directly to the specific contract (b) Costs that are attributable to contract activity in general and can be allocated to the contract; and ITAs 3981, 6305, 6282, 6281 & 3982 whereas according to the Assessing Officer, the interest and other expenses were related directly to and, therefore, same should have been included in the ‘work progress’(WIP) of relevant projects. It was submitted by the assessee that project during the year had been completed upto 95% and, therefore, all the expenses were debited to the P&L Account and adding to the WIP was not justified. The assessee Accounting Standard-7 (As-7) to support the claim of finance and other expenses as revenue expenses. The Ld.AO rejected the contention of the assessee and removed the said expenses from P&L Account and included the same into the WIP of the project. The relevant finding of the Assessing Officer is reproduced as under:- 3.4 The submissions made by the assessee has been carefully perused and considered. However, the same is not acceptable. It may be mention inspite of providing two show causes i.e. two opportunities, the assesse has not submitted the details of interest expenditure based on the projects and completion of individual project. The assesse has heavily relied on AS for "Constructions Contracts". The asssessee has submitted that in Para 7, nowhere it is mentioned about inclusion of finance cost into the Cost of Construction. Hence the same shall not be part of the WIP and is allowable as revenue expenditure. In the same manner, the assessee company has relied heavily on Para 19 of AS-7 that the General & Administration Cost and Selling Cost are to be excluded from the Construction Cost since these costs/expenses cannot be attributed to contract activity or cannot be allocated to a contract. In this regard para 15 and para 19 of AS 7 are discussed as under: Para 15 of the AS-7 states that Contract Costs should comprise: Costs that relate directly to the specific contract Costs that are attributable to contract activity in general and can be allocated to the contract; and Rustomjee group . 3981, 6305, 6282, 6281 & 3982/Mum/2017 4 whereas according to the Assessing Officer, the to the project cost e been included in the ‘work-in- It was submitted by the assessee that project during the year had been completed upto 95% and, therefore, all the expenses were debited to the P&L Account assessee relied on the 7) to support the claim of finance i.e. and other expenses as revenue expenses. The Ld.AO rejected the contention of the assessee and removed the said cluded the same into the WIP of the project. The relevant finding of the Assessing Officer is 3.4 The submissions made by the assessee has been carefully perused and considered. However, the same is not acceptable. It may be mentioned here that inspite of providing two show causes i.e. two opportunities, the assesse has not submitted the details of interest expenditure based on the projects and completion of individual project. The assesse has heavily relied on AS - 7 issued for "Constructions Contracts". The asssessee has submitted that in Para 7, nowhere it is mentioned about inclusion of finance cost into the Cost of Construction. Hence the same shall not be part of the WIP and is iture. In the same manner, the assessee company 7 that the General & Administration Cost and Selling Cost are to be excluded from the Construction Cost since these y or cannot be allocated to a contract. In this regard para 15 and para 19 of AS 7 are discussed as under:- Costs that are attributable to contract activity in general and can be (c) Such other costs as are specifically chargeable to customer under the terms of the contract;” 3.5. As per the above para, the cost has been treated on attribution of the cost the project. Further Para 16 & 17 which deals with the costs as mentioned in (a) and (b) above are inclusive definitions and includes the costs mentioned there in are an example and it by no meaning can exclude the other costs which are directly attributable to the construction cost. It may be noted that the Finance Cos as debited by the assessee company is on borrowed fund, which are sanctioned on the basis of specific projects. In other words, these borrowings are in CCs / ODs. There is direct nexus between the borrowed fund and the projects undertaken. Thus, the interest on respective project Fund can be attributed to the respective project on actual basis. Once project, the same is to be allowed as business expenditure in ratio of the revenue offered from the project and WIP at the end of the year. 3.6 In respect of assessee's debited to Profit & Loss Account, the assesse has relied on Para 19 of the AS. It is to be noted that The para 19 starts with "Costs that cannot be attributable ........'. So the general admin costs as referred in General Admin expenses that are not directly attributable to the construction project. If these expenses are directly attributable to the construction contract, the question of applicability of Para 19 does not arise. It is to be noted that the assessee company is expenses incurred in this business are based on the specific project. It is observed that under the head of "General / Other Expenses', the assesse has debited Professional Fees / Technical Fees. These attributable to the projects. It may further be noted that the Income Tax Act, 1961 does not have any specific accounting standard in relation to construction contracts. Hence the claim of the expenses is governed by the provisions Section 29 to 43B of the Act, which are based on the principle of matching concept of income and expenditure. The Section 37(1) of the Act itself restricts the claim of the expenses in relation to income offered in that particular year. Any expenses attributable to the future income are to be capitalized and are to be allowed in year, in which this future income is offered for taxation. 3.7 From above, it is concluded that the finance cost, selling and marketing expenses and general expenses are to be a the extent of attribution to the revenue offered. In this regard, reliance has been placed on the principles laid down in case of 1997 60 ITD 621 Mum. 3.8 It is to be noted that the assess by way of show cause, one wide order sheet recording and other by Show ITAs 3981, 6305, 6282, 6281 & 3982 Such other costs as are specifically chargeable to customer under the terms of As per the above para, the cost has been treated on attribution of the cost the project. Further Para 16 & 17 which deals with the costs as mentioned in (a) and (b) above are inclusive definitions and includes the costs mentioned there in are an example and it by no meaning can exclude er costs which are directly attributable to the construction cost. It may be noted that the Finance Cos as debited by the assessee company is on borrowed fund, which are sanctioned on the basis of specific projects. In other words, these borrowings are in nature of Project Funds and not general Term Loans / CCs / ODs. There is direct nexus between the borrowed fund and the projects undertaken. Thus, the interest on respective project Fund can be attributed to the respective project on actual basis. Once the interest is attributable project, the same is to be allowed as business expenditure in ratio of the revenue offered from the project and WIP at the end of the year. In respect of assessee's claim of other Expenses of Rs. 57,92,965/ debited to Profit & Loss Account, the assesse has relied on Para 19 of the AS. It is to be noted that The para 19 starts with "Costs that cannot be attributable ........'. So the general admin costs as referred in Para 19 is with reference to the dmin expenses that are not directly attributable to the construction project. If these expenses are directly attributable to the construction contract, the question of applicability of Para 19 does not arise. It is to be noted that the assessee company is one of the reputed construction company in Mumbai. The expenses incurred in this business are based on the specific project. It is observed that under the head of "General / Other Expenses', the assesse has debited Professional Fees / Technical Fees. These fees are also directly attributable to the projects. It may further be noted that the Income Tax Act, 1961 does not have any specific accounting standard in relation to construction contracts. Hence the claim of the expenses is governed by the provisions Section 29 to 43B of the Act, which are based on the principle of matching concept of income and expenditure. The Section 37(1) of the Act itself restricts the claim of the expenses in relation to income offered in that particular year. ributable to the future income are to be capitalized and are to be allowed in year, in which this future income is offered for taxation. From above, it is concluded that the finance cost, selling and marketing expenses and general expenses are to be allowed as revenue expenditure to the extent of attribution to the revenue offered. In this regard, reliance has been placed on the principles laid down in case of S.K. Estates (P.) Ltd. vsACIT, ITD 621 Mum. It is to be noted that the assessee company was provided two opportunities by way of show cause, one wide order sheet recording and other by Show Rustomjee group . 3981, 6305, 6282, 6281 & 3982/Mum/2017 5 Such other costs as are specifically chargeable to customer under the terms of As per the above para, the cost has been treated on the basis of attribution of the cost the project. Further Para 16 & 17 which deals with the costs as mentioned in (a) and (b) above are inclusive definitions and includes the costs mentioned there in are an example and it by no meaning can exclude er costs which are directly attributable to the construction cost. It may be noted that the Finance Cos as debited by the assessee company is on borrowed fund, which are sanctioned on the basis of specific projects. In other words, nature of Project Funds and not general Term Loans / CCs / ODs. There is direct nexus between the borrowed fund and the projects undertaken. Thus, the interest on respective project Fund can be attributed to the interest is attributable to the project, the same is to be allowed as business expenditure in ratio of the aim of other Expenses of Rs. 57,92,965/- debited to Profit & Loss Account, the assesse has relied on Para 19 of the AS. It is to be noted that The para 19 starts with "Costs that cannot be attributable Para 19 is with reference to the dmin expenses that are not directly attributable to the construction project. If these expenses are directly attributable to the construction contract, the question of applicability of Para 19 does not arise. It is to be noted that the one of the reputed construction company in Mumbai. The expenses incurred in this business are based on the specific project. It is observed that under the head of "General / Other Expenses', the assesse has fees are also directly attributable to the projects. It may further be noted that the Income Tax Act, 1961 does not have any specific accounting standard in relation to construction contracts. Hence the claim of the expenses is governed by the provisions of Section 29 to 43B of the Act, which are based on the principle of matching concept of income and expenditure. The Section 37(1) of the Act itself restricts the claim of the expenses in relation to income offered in that particular year. ributable to the future income are to be capitalized and are to be allowed in year, in which this future income is offered for taxation. From above, it is concluded that the finance cost, selling and marketing llowed as revenue expenditure to the extent of attribution to the revenue offered. In this regard, reliance has been S.K. Estates (P.) Ltd. vsACIT, company was provided two opportunities by way of show cause, one wide order sheet recording and other by Show Cause notice dated 9.03.2015 so as to justify the claim of finance cost, Selling and Marketing expenses and general expenses as revenue various opportunities, the assessee company has made general claims and has not justified its claim as treating interest expenses and other expenses as revenue expenditure. Th above expenses nor has furnished any details of the ratio in which the revenue has been offered to tax and WIP at the end of the year. In the absence of the details and as per the provisions of Section 37 of the Act, interest of Rs.4,39,48,540/-, and other Exp Rs.4,97,38,505/- attributable to the capital is transferred to the total income of the assessee stands increased to that extent. By claiming such inadmissible expenses, the assessee has not only con also filed inaccurate particulars thereof. Penalty proceedings u/s. 271(l)(c) of the I.T. Act, 1961 are initiated separately for the default committed by the assessee within the meaning of that section.” 5. On appeal, the Ld.CIT(A) in terms of Rule 46A of Income Tax Rules, 19562. The Ld.CIT(A), after calling for the remand report from the Assessing Officer accepted the contention of the assessee and deleted the disallowance made by the Assessing Officer of rs.4,97,38,505/ observing as under:- “Decision Ground No.1: Ground of Appeal, the Appellant has agitated the disallowance of expenses amounting to Rs.4,97,38,505/ the Appellant vis-a-vis assessment order. On perusal of the same, I find that the A.O. has disallowed expenses amounting to Rs.4,97,38,505/ that the same are required to be added to the WIP of the Project. On the other hand, I find that the Appella purpose of Accounting Project is on the verge of completion and therefore adding the impugned expenses to the WIP would not be justified in such circumstance Appellant vehemently contended that the Accounting Standard of ICAI supports their case. The Appellant further submitted that in such a scenario that the administrative expenses need to be charged off to Profit & Loss Account. I also find that the Appellant submitted guidance note on completion method issued by ICAI while presenting their case during proceedings. Apart ITAs 3981, 6305, 6282, 6281 & 3982 9.03.2015 so as to justify the claim of finance cost, Selling and Marketing expenses and general expenses as revenue expenditure. Despite various opportunities, the assessee company has made general claims and has not justified its claim as treating interest expenses and other expenses as The assesse has neither submitted projectwise break up of e expenses nor has furnished any details of the ratio in which the revenue has been offered to tax and WIP at the end of the year. In the absence of the details and as per the provisions of Section 37 of the Act, interest of , and other Expenses of ₹57,92,965/- aggregating to attributable to the capital is transferred to the capital WIP and the total income of the assessee stands increased to that extent. By claiming such inadmissible expenses, the assessee has not only concealed its income but has also filed inaccurate particulars thereof. Penalty proceedings u/s. 271(l)(c) of the I.T. Act, 1961 are initiated separately for the default committed by the assessee within the meaning of that section.” On appeal, the assessee filed additional evidences before the (A) in terms of Rule 46A of Income Tax Rules, 19562. The Ld.CIT(A), after calling for the remand report from the Assessing Officer accepted the contention of the assessee and deleted the de by the Assessing Officer of rs.4,97,38,505/ Ground of Appeal, the Appellant has agitated the disallowance of expenses amounting to Rs.4,97,38,505/-. I have carefully considered the submissions of vis assessment order. On perusal of the same, I find that the A.O. has disallowed expenses amounting to Rs.4,97,38,505/ that the same are required to be added to the WIP of the Project. On the other hand, I find that the Appellants following Percentage Completion Method for purpose of Accounting. It is further contended by the Appellant that the Project is on the verge of completion and therefore adding the impugned expenses to the WIP would not be justified in such circumstance Appellant vehemently contended that the Accounting Standard of ICAI supports their case. The Appellant further submitted that in such a scenario that the administrative expenses need to be charged off to Profit & Loss hat the Appellant submitted guidance note on completion issued by ICAI while presenting their case during proceedings. Apart Rustomjee group . 3981, 6305, 6282, 6281 & 3982/Mum/2017 6 9.03.2015 so as to justify the claim of finance cost, Selling expenditure. Despite various opportunities, the assessee company has made general claims and has not justified its claim as treating interest expenses and other expenses as ectwise break up of e expenses nor has furnished any details of the ratio in which the revenue has been offered to tax and WIP at the end of the year. In the absence of the details and as per the provisions of Section 37 of the Act, interest of aggregating to the capital WIP and the total income of the assessee stands increased to that extent. By claiming such cealed its income but has also filed inaccurate particulars thereof. Penalty proceedings u/s. 271(l)(c) of the I.T. Act, 1961 are initiated separately for the default committed by the assessee within assessee filed additional evidences before the (A) in terms of Rule 46A of Income Tax Rules, 19562. The Ld.CIT(A), after calling for the remand report from the Assessing Officer accepted the contention of the assessee and deleted the de by the Assessing Officer of rs.4,97,38,505/- Ground of Appeal, the Appellant has agitated the disallowance of expenses . I have carefully considered the submissions of vis assessment order. On perusal of the same, I find that the A.O. has disallowed expenses amounting to Rs.4,97,38,505/- by holding that the same are required to be added to the WIP of the Project. On the other nts following Percentage Completion Method for It is further contended by the Appellant that the Project is on the verge of completion and therefore adding the impugned expenses to the WIP would not be justified in such circumstances. In fact, the Appellant vehemently contended that the Accounting Standard of ICAI supports their case. The Appellant further submitted that in such a scenario that the administrative expenses need to be charged off to Profit & Loss hat the Appellant submitted guidance note on completion issued by ICAI while presenting their case during proceedings. Apart from this, the Appellant also submitted the breakup of Revenue recognized for 4 years, sample copies of invoices; break up o deeds executed and reiterated his earlier stand in Remand proceedings as well. I have also perused detailed submissions dated 29.11.2016 and find that the treatment given by the Appellant is in conformity with the AS 7 & AS 16. I, therefore, find that the disallowance made by the A.O. is against the said Accounting Standards. Moreover, the documentary evidences produced during the Remand Proceedings also advances the case o considering stage of completion, facts of the case and the case laws relied upon by the Appellant, all favouring the treatment adopted by the Appellant for Construction Accounting. Moreover, by capitalization there is no loss or profit to the Revenue. Accordingly, the disallowance made by the A.O. of Rs. 4,97,38,505/- is deleted. Accordingly, this Ground of Appeal is allowed.” 6. Before us, the Ld. containing pages 1 to 31. 7. We have heard rival submissions of the parties on the issue in dispute and perused the relevant material on record. In this case, the dispute is regarding treatment of interest amounting to ₹4,339,48,540/- and other expenses amounting to According to the assessee, these expenses should be charged to P&L Account and be allowed as revenue expenditure. However, the contention of the Ld.AO is that these expenses are related directly to the projects being carried out by the assessee and profit f those projects has been declared by the assessee following percentage completion method. Therefore, the cost related to the project of construction / development of the building becomes eligible for deduction against the revenue recognized from said ITAs 3981, 6305, 6282, 6281 & 3982 from this, the Appellant also submitted the breakup of Revenue recognized for 4 years, sample copies of invoices; break up of costs for 4 years, value of sale documents to support expenses. However, the A.O. reiterated his earlier stand in Remand proceedings as well. I have also perused detailed submissions dated 29.11.2016 and find that the by the Appellant is in conformity with the AS 7 & AS 16. I, therefore, find that the disallowance made by the A.O. is against the said Accounting Standards. Moreover, the documentary evidences produced during the Remand Proceedings also advances the case of the Appellant. After considering stage of completion, facts of the case and the case laws relied upon by the Appellant, all favouring the treatment adopted by the Appellant for Construction Accounting. Moreover, by capitalization there is no loss or it to the Revenue. Accordingly, the disallowance made by the A.O. of Rs. is deleted. Accordingly, this Ground of Appeal is allowed.” Before us, the Ld. Counsel of the assessee filed a paper book containing pages 1 to 31. We have heard rival submissions of the parties on the issue in dispute and perused the relevant material on record. In this case, the dispute is regarding treatment of interest amounting to and other expenses amounting to cording to the assessee, these expenses should be charged to P&L Account and be allowed as revenue expenditure. However, the contention of the Ld.AO is that these expenses are related directly to the projects being carried out by the assessee and profit f those projects has been declared by the assessee following percentage completion method. Therefore, the cost related to the project of construction / development of the building becomes eligible for deduction against the revenue recognized from said Rustomjee group . 3981, 6305, 6282, 6281 & 3982/Mum/2017 7 from this, the Appellant also submitted the breakup of Revenue recognized for f costs for 4 years, value of sale documents to support expenses. However, the A.O. I have also perused detailed submissions dated 29.11.2016 and find that the by the Appellant is in conformity with the AS 7 & AS 16. I, therefore, find that the disallowance made by the A.O. is against the said Accounting Standards. Moreover, the documentary evidences produced during f the Appellant. After considering stage of completion, facts of the case and the case laws relied upon by the Appellant, all favouring the treatment adopted by the Appellant for Construction Accounting. Moreover, by capitalization there is no loss or it to the Revenue. Accordingly, the disallowance made by the A.O. of Rs. Counsel of the assessee filed a paper book We have heard rival submissions of the parties on the issue in dispute and perused the relevant material on record. In this case, the dispute is regarding treatment of interest amounting to and other expenses amounting to ₹57,92,966/-. cording to the assessee, these expenses should be charged to P&L Account and be allowed as revenue expenditure. However, the contention of the Ld.AO is that these expenses are related directly to the projects being carried out by the assessee and profit from those projects has been declared by the assessee following percentage completion method. Therefore, the cost related to the project of construction / development of the building becomes eligible for deduction against the revenue recognized from said project in proportion of the project completed. The Ld.CIT(A), however, has reversed the finding of the Ld.AO. 8. We find that in this case, the finance plus interest cost claimed by the assessee pertains to bank overdraft, unsecured loans and others, hav Particulars Interest expenses on bank overdraft Interest expenses on Unsecured Loans Interest Paid Others Total Finance Cost incurred during A.Y. 2014-15 9. The details of other expenses have been reproduced by the Ld. CIT(A) in para 4.9 of the impugned order. There is no dispute on the method of declaring profit following project completion method. The only dispute is regarding working out net profit during the year under consideration assessee has referred to AS which are incurred directly in relation to a project or which are apportioned to the project is included in the projec construction and development cost which relates directly to a specific project including loan conversion cost, labour cost, depreciation of plant and equipment used for the project, cost of moving plant, equipment and materials to and fr cost of hiring plant and equipment, etc. from part of the project cost. The only contention of the assessee ITAs 3981, 6305, 6282, 6281 & 3982 roject in proportion of the project completed. The Ld.CIT(A), however, has reversed the finding of the Ld.AO. We find that in this case, the finance plus interest cost claimed by the assessee pertains to bank overdraft, unsecured loans and others, having details as under:- Amount in Rupees Interest expenses on bank overdraft Interest expenses on Unsecured Loans Total Finance Cost incurred during details of other expenses have been reproduced by the Ld. CIT(A) in para 4.9 of the impugned order. There is no dispute on the method of declaring profit following project completion method. The only dispute is regarding the treatment of finance and other g out net profit during the year under consideration assessee has referred to AS-7 according to which operating cost which are incurred directly in relation to a project or which are apportioned to the project is included in the project cost. Similarly construction and development cost which relates directly to a specific project including loan conversion cost, labour cost, depreciation of plant and equipment used for the project, cost of moving plant, equipment and materials to and from the project site, cost of hiring plant and equipment, etc. from part of the project cost. The only contention of the assessee in support of claiming the Rustomjee group . 3981, 6305, 6282, 6281 & 3982/Mum/2017 8 roject in proportion of the project completed. The Ld.CIT(A), We find that in this case, the finance plus interest cost claimed by the assessee pertains to bank overdraft, unsecured Amount in Rupees 74,232/- 4,35,50,933/- 3,23,375/- 4,39,48,540/- details of other expenses have been reproduced by the Ld. CIT(A) in para 4.9 of the impugned order. There is no dispute on the method of declaring profit following project completion method. The finance and other cost for g out net profit during the year under consideration. The 7 according to which operating cost which are incurred directly in relation to a project or which are t cost. Similarly construction and development cost which relates directly to a specific project including loan conversion cost, labour cost, depreciation of plant and equipment used for the project, cost of om the project site, cost of hiring plant and equipment, etc. from part of the project in support of claiming the interest and other expenses as revenue expenses on the verge of completion and, finance and other cost is not justified for adding into WIP that the project of the assessee was completed on 08/05/2012 as per paper book page 31, which falls in subsequent assessment year i.e. A.Y. 2013-14. In such circumstances, if the expenses related to project are not included in the project cost, then profit from the project will be distorted which will be against the principle of percentage completion method. for income which has accrue the purpose of taxation since in long term projects, when substantial part of the project is completed, the risk and rewards shift from the assessee and corresponding income accrue assessee, which is offered computed following the percentage completion method, however cost cannot be allowed to be debited to P&L Account. the assessee did not provide details of the borrowings and purpose for which those borrowings were utilized and corresponding interest expenditure. Similarly regarding other expenses also, particularly advertisement & publicity and commission & brokerage, no details have been provided for determination whether th pertain directly to the undergoing project. expenses, which are directly related to the project should not be included in project cost and balance should be debited to P&L ITAs 3981, 6305, 6282, 6281 & 3982 interest and other expenses as revenue expenses is that project was on the verge of completion and, therefore, this amount of interest / finance and other cost is not justified for adding into WIP he project of the assessee was completed on 08/05/2012 as per paper book page 31, which falls in subsequent assessment year In such circumstances, if the expenses related to project are not included in the project cost, then profit from the project will be distorted which will be against the principle of percentage completion method. The section 4 of the Act prescribes ome which has accrued to the assessee, during the y the purpose of taxation since in long term projects, when substantial part of the project is completed, the risk and rewards shift from the assessee and corresponding income accrue which is offered computed following the percentage however, the expenses which pertain to project cost cannot be allowed to be debited to P&L Account. he assessee did not provide details of the borrowings and purpose which those borrowings were utilized and corresponding interest expenditure. Similarly regarding other expenses also, particularly publicity and commission & brokerage, no details have been provided for determination whether th pertain directly to the undergoing project. The interest and other expenses, which are directly related to the project should not be included in project cost and balance should be debited to P&L Rustomjee group . 3981, 6305, 6282, 6281 & 3982/Mum/2017 9 is that project was therefore, this amount of interest / finance and other cost is not justified for adding into WIP we find he project of the assessee was completed on 08/05/2012 as per paper book page 31, which falls in subsequent assessment year In such circumstances, if the expenses related to project are not included in the project cost, then profit from the project will be distorted which will be against the principle of The section 4 of the Act prescribes during the year for the purpose of taxation since in long term projects, when substantial part of the project is completed, the risk and rewards shift from the assessee and corresponding income accrue to the which is offered computed following the percentage , the expenses which pertain to project cost cannot be allowed to be debited to P&L Account. In the case, he assessee did not provide details of the borrowings and purpose which those borrowings were utilized and corresponding interest expenditure. Similarly regarding other expenses also, particularly publicity and commission & brokerage, no details have been provided for determination whether those expenses The interest and other expenses, which are directly related to the project should not be included in project cost and balance should be debited to P&L Account. The gross profit from project is then credited to P Account and the expenses in the nature of Administration and General, which are not specific to project like directors’ remuneration, office expenses are debited in P&L Account and then net profit / loss is computed as per the case, assessee is seeking to debit whole of interest and other expenses to profit & loss account. which are directly related to the project should not be included in Project cost and balance should be debited to P&L a facts and circumstances of the case, we feel it appropriate to restore this issue back to the file of the Ld. CIT(A) for determining the quantum of interest and other expenses related directly to the project. The assessee is directed to co details of the finance and other expenses alongwith ledgers and vouchers. It is needless to mention that assessee shall be afforded adequate opportunity of being heard. is allowed for statistical purpo 10. Now we shall take up appeals of the Revenue in the case of Rustomjee Construction Pvt raised by the Revenue are reproduced as under: "1. On the facts and in the circumstances of the case and in law, the id. CIT (A) erred in not appreciating the fact that the assessee had failed to establish the nexus between revenue offered and the expenses c!aimed and Since, the assessee does not establish the nexus of income offered and expenses claimed as revenue expenditure, the treatment of ITAs 3981, 6305, 6282, 6281 & 3982 The gross profit from project is then credited to P Account and the expenses in the nature of Administration and General, which are not specific to project like directors’ remuneration, office expenses are debited in P&L Account and then net profit / loss is computed as per accounting principles. But in the case, assessee is seeking to debit whole of interest and other expenses to profit & loss account. The interest and other expenses, which are directly related to the project should not be included in Project cost and balance should be debited to P&L a facts and circumstances of the case, we feel it appropriate to restore this issue back to the file of the Ld. CIT(A) for determining the quantum of interest and other expenses related directly to the The assessee is directed to co-operate and provide all the details of the finance and other expenses alongwith ledgers and vouchers. It is needless to mention that assessee shall be afforded adequate opportunity of being heard. Ground No.1 of the Revenue is allowed for statistical purpose. Now we shall take up appeals of the Revenue in the case of Rustomjee Construction Pvt. Ltd for A.Y. 2012-13. The gvrounds raised by the Revenue are reproduced as under:- On the facts and in the circumstances of the case and in law, the id. CIT (A) erred in not appreciating the fact that the assessee had failed to establish the nexus between revenue offered and the expenses c!aimed and and expenses claim and closing work the assessee does not establish the nexus of income offered and expenses claimed as revenue expenditure, the treatment of Rustomjee group . 3981, 6305, 6282, 6281 & 3982/Mum/2017 10 The gross profit from project is then credited to P&L Account and the expenses in the nature of Administration and General, which are not specific to project like directors’ remuneration, office expenses are debited in P&L Account and then accounting principles. But in the case, assessee is seeking to debit whole of interest and other The interest and other expenses, which are directly related to the project should not be included in Project cost and balance should be debited to P&L account. In the facts and circumstances of the case, we feel it appropriate to restore this issue back to the file of the Ld. CIT(A) for determining the quantum of interest and other expenses related directly to the perate and provide all the details of the finance and other expenses alongwith ledgers and vouchers. It is needless to mention that assessee shall be afforded Ground No.1 of the Revenue Now we shall take up appeals of the Revenue in the case of 13. The gvrounds On the facts and in the circumstances of the case and in law, the id. CIT (A) erred in not appreciating the fact that the assessee had failed to establish the nexus between revenue offered and the expenses closing work-in- progress. the assessee does not establish the nexus of income offered and expenses claimed as revenue expenditure, the treatment of expenses debited in P&L A/c as capital expenditure by the AO is correct, justifiable and as per the provisions of t 11. In the case assessee contested before the Ld.Assessing Officer that project was on its very crucial stage and no construction activity had been carried out during the year under consideration. Therefore, potion of the finance cost was d and not carried to WIP. However, we find that Ld. CIT(A) has given finding based on the fact that project of the assessee was on the verge of completion. The relevant finding of the Ld.CIT(A) is reproduced as under: “Ground No.2 ; Under this Ground of Appeal, the Appellant has agitated the disallowance of expenses amounting to Rs. 10,10,59,304/ submissions of the Appellant vis same, I find that the A.O. has 10,10,59,304/- by holding that the same are required to be added to the WIP of the Project. On the other hand, I find that the Appellant is following Percentage Completion Method for purpose of Accounting. It is further contended by the Appellant that the Project is on the verge of completion and therefore adding the impugned expenses to the WIP would not be justified in such circumstances. In fact, the Appellant vehemently contended that the Accounting Standard of ICAI submitted that in such a scenario that the administrative expenses need to be charged off to Profit & Loss Account. I also find that the Appellant submitted guidance note on completion method issued by ICAI while case during proceedings. Apart from this, the Appellant also submitted the breakup of Revenue recognized for 4 years, sample copies of invoices; break up of costs for 4 years, value of sale deeds executed and documents to support expenses. However, the A.O. reiterated his earlier stand in Remand proceedings as well. I have also perused detailed submissions dated 23.05.2017 and find that the treatment given by the Appellant is in conformity with the AS 7 & AS 16. I, therefore, find that the ITAs 3981, 6305, 6282, 6281 & 3982 expenses debited in P&L A/c as capital expenditure by the AO is correct, justifiable and as per the provisions of the I. T. Act." In the case assessee contested before the Ld.Assessing Officer that project was on its very crucial stage and no construction activity had been carried out during the year under consideration. Therefore, potion of the finance cost was debited to P&L Account and not carried to WIP. However, we find that Ld. CIT(A) has given finding based on the fact that project of the assessee was on the verge of completion. The relevant finding of the Ld.CIT(A) is reproduced as under:- Under this Ground of Appeal, the Appellant has agitated the disallowance of expenses amounting to Rs. 10,10,59,304/-. I have carefully considered the submissions of the Appellant vis-a-vis assessment order. On perusal of the same, I find that the A.O. has disallowed expenses amounting to Rs. by holding that the same are required to be added to the WIP of the Project. On the other hand, I find that the Appellant is following Percentage Completion Method for purpose of Accounting. It is further contended by the Appellant that the Project is on the verge of completion and therefore adding the impugned expenses to the WIP would not be justified in such circumstances. In fact, the Appellant vehemently contended that the Accounting Standard of ICAI supports their case. The Appellant further submitted that in such a scenario that the administrative expenses need to be charged off to Profit & Loss Account. I also find that the Appellant submitted guidance note on completion method issued by ICAI while presenting their case during proceedings. Apart from this, the Appellant also submitted the breakup of Revenue recognized for 4 years, sample copies of invoices; break up of costs for 4 years, value of sale deeds executed and documents to support However, the A.O. reiterated his earlier stand in Remand I have also perused detailed submissions dated 23.05.2017 and find that the treatment given by the Appellant is in conformity with the AS 7 & AS 16. I, therefore, find that the disallowance made by the A.O. is against the said Rustomjee group . 3981, 6305, 6282, 6281 & 3982/Mum/2017 11 expenses debited in P&L A/c as capital expenditure by the AO is he I. T. Act." In the case assessee contested before the Ld.Assessing Officer that project was on its very crucial stage and no construction activity had been carried out during the year under consideration. ebited to P&L Account and not carried to WIP. However, we find that Ld. CIT(A) has given finding based on the fact that project of the assessee was on the verge of completion. The relevant finding of the Ld.CIT(A) is Under this Ground of Appeal, the Appellant has agitated the disallowance of . I have carefully considered the vis assessment order. On perusal of the disallowed expenses amounting to Rs. by holding that the same are required to be added to the WIP of the Project. On the other hand, I find that the Appellant is following Percentage Completion Method for purpose of Accounting. It is further contended by the Appellant that the Project is on the verge of completion and therefore adding the impugned expenses to the WIP would not be justified in such circumstances. In fact, the Appellant vehemently contended that the supports their case. The Appellant further submitted that in such a scenario that the administrative expenses need to be charged off to Profit & Loss Account. I also find that the Appellant submitted presenting their case during proceedings. Apart from this, the Appellant also submitted the breakup of Revenue recognized for 4 years, sample copies of invoices; break up of costs for 4 years, value of sale deeds executed and documents to support However, the A.O. reiterated his earlier stand in Remand I have also perused detailed submissions dated 23.05.2017 and find that the treatment given by the Appellant is in conformity with the AS 7 & AS 16. I, disallowance made by the A.O. is against the said Accounting Standards. Moreover, the documentary evidences produced during the Remand Proceedings also advances the case of the Appellant, After considering stage of completion, facts of the case and the cas upon by the Appellant, all favoring the treatment adopted by the Appellant for Construction Accounting. Moreover, by capitalization there is no loss or profit to the Revenue. Accordingly, the disallowance made by the A.O. of ₹10,10,59304/- is deleted. Accordingly, 12. We have heard rival submissions of the parties on the issue in dispute and perused relevant materials on record. We find that the facts mentioned by the Ld. CIT(A) repeated the facts of Rustomjee Buildcon Pvt Ltd. Since the decision arrived at by the Ld.CIT(A) is ignorance of the facts of the instant case, same being perverse on facts, is set aside and matter is restored Ld.CIT(A) for deciding afresh keeping in view correct facts of the case. 13. The ground of A.Y. 2013 Pvt. Ltd is as under:- "1. On the facts and in the circumstances of the case and in law, the id. CIT (A) erred in not appreciating the fact that the assessee had failed to establish the nexus between revenue offered and the expenses claimed and Since, the assessee does not establish the nexus of income offered and expenses claimed as revenue expenditure, the treatment of expenses debited in P&L A/c as capital expenditure by the AO is correct, justifiable and as per the provisions of 14. In this case also, there is a perversity of facts assumed by the Ld. CIT(A). The finding of the Ld. “Decision ITAs 3981, 6305, 6282, 6281 & 3982 Accounting Standards. Moreover, the documentary evidences produced during the Remand Proceedings also advances the case of the Appellant, After considering stage of completion, facts of the case and the cas upon by the Appellant, all favoring the treatment adopted by the Appellant for Construction Accounting. Moreover, by capitalization there is no loss or profit to the Revenue. Accordingly, the disallowance made by the A.O. of is deleted. Accordingly, this Ground of Appeal is allowed.” We have heard rival submissions of the parties on the issue in dispute and perused relevant materials on record. We find that the facts mentioned by the Ld. CIT(A) are perverse. Actually, t CIT(A) repeated the facts of Rustomjee Buildcon Pvt Ltd. Since the decision arrived at by the Ld.CIT(A) is based on ignorance of the facts of the instant case, same being perverse on is set aside and matter is restored back to the file of the for deciding afresh keeping in view correct facts of the The ground of A.Y. 2013-14 in M/s Rustomjee Construction - On the facts and in the circumstances of the case and in law, the id. CIT (A) erred in not appreciating the fact that the assessee had failed to establish the nexus between revenue offered and the expenses and and expenses claimed and closing work the assessee does not establish the nexus of income offered and expenses claimed as revenue expenditure, the treatment of expenses debited in P&L A/c as capital expenditure by the AO is correct, justifiable and as per the provisions of the I. T. Act." In this case also, there is a perversity of facts assumed by the CIT(A). The finding of the Ld. CIT(A) is reproduced as under: Rustomjee group . 3981, 6305, 6282, 6281 & 3982/Mum/2017 12 Accounting Standards. Moreover, the documentary evidences produced during the Remand Proceedings also advances the case of the Appellant, After considering stage of completion, facts of the case and the case laws relied upon by the Appellant, all favoring the treatment adopted by the Appellant for Construction Accounting. Moreover, by capitalization there is no loss or profit to the Revenue. Accordingly, the disallowance made by the A.O. of this Ground of Appeal is allowed.” We have heard rival submissions of the parties on the issue in dispute and perused relevant materials on record. We find that the CIT(A) are perverse. Actually, the Ld. CIT(A) repeated the facts of Rustomjee Buildcon Pvt Ltd. Since the based on incorrect facts, ignorance of the facts of the instant case, same being perverse on to the file of the for deciding afresh keeping in view correct facts of the in M/s Rustomjee Construction On the facts and in the circumstances of the case and in law, the id. CIT (A) erred in not appreciating the fact that the assessee had failed to establish the nexus between revenue offered and the expenses closing work-in- progress. the assessee does not establish the nexus of income offered and expenses claimed as revenue expenditure, the treatment of expenses debited in P&L A/c as capital expenditure by the AO is the I. T. Act." In this case also, there is a perversity of facts assumed by the CIT(A) is reproduced as under:- Ground No. 2: Under this Ground of Appeal, the Appellant has agitated the disallowanc of expenses amounting to Rs. 34,996,200/ submissions of the Appellant vis same, I find that the A.O. has disallowed expenses amounting to Rs 34,996,200/- by holding that the same are required to be added to the W1I of the Project. On the other hand, I find that the Appellant is followi Percentage Completion Method for purpose contended by the Appellant that the Project is on the verge of completi and therefore adding the impugned expenses to the WIP would not be justified in such circumstances. In fact, the Appellant vehement contended that the Accounting Standard of ICAI supports their case. The Appellant further submitted that in such a scenario that the administrative expenses need to be charged off to Profit & Loss Account. I also find tha the Appellant submitted guidance note while presenting their case during proceedings. Apart from this, the Appellant also submitted the breakup of Revenue recognized for 4 years, sample copies of invoices; break up of costs for 4 years, value of sale deeds executed and documents to support expenses. However, the A.O. reiterated his earlier stand in Remand proceedings as well. I have also perused detailed submissions dated 23.05.2017 and find that the treatment given by the Appellant is in conformity with the A therefore, find that the disallowance made by the A.O. is against the said Accounting Standards. Moreover, the documentary evidences produced during the Remand Proceedings also advances the case of the Appellant After considering stage of c relied upon by the Appellant, all favoring the treatment adopted by the Appellant for Construction Accounting. Moreover, by capitalization there is no loss or profit to the Revenue. Accordingly, the disallowan A.O. of Rs. 34,996,200/ allowed.” 15. The Ld. CIT(A) in his finding remand report from the Assessing Officer whereas no such remand report was called for by by the Ld. Counsel of the assessee also ITAs 3981, 6305, 6282, 6281 & 3982 Under this Ground of Appeal, the Appellant has agitated the disallowanc of expenses amounting to Rs. 34,996,200/-. I have carefully considered th submissions of the Appellant vis-a-vis assessment order. On perusal of th same, I find that the A.O. has disallowed expenses amounting to Rs by holding that the same are required to be added to the W1I of the Project. On the other hand, I find that the Appellant is followi Percentage Completion Method for purpose of Accounting. It is furth contended by the Appellant that the Project is on the verge of completi and therefore adding the impugned expenses to the WIP would not be justified in such circumstances. In fact, the Appellant vehement nded that the Accounting Standard of ICAI supports their case. The Appellant further submitted that in such a scenario that the administrative expenses need to be charged off to Profit & Loss Account. I also find tha the Appellant submitted guidance note on completion method issued b while presenting their case during proceedings. Apart from this, the Appellant also submitted the breakup of Revenue recognized for 4 years, sample copies of invoices; break up of costs for 4 years, value of sale deeds ecuted and documents to support expenses. However, the A.O. reiterated his earlier stand in Remand proceedings as well. I have also perused detailed submissions dated 23.05.2017 and find that the treatment given by the Appellant is in conformity with the AS 7 & AS 16. I, therefore, find that the disallowance made by the A.O. is against the said Accounting Standards. Moreover, the documentary evidences produced during the Remand Proceedings also advances the case of the Appellant After considering stage of completion, facts of the case and the case laws relied upon by the Appellant, all favoring the treatment adopted by the Appellant for Construction Accounting. Moreover, by capitalization there is no loss or profit to the Revenue. Accordingly, the disallowan A.O. of Rs. 34,996,200/- is deleted. Accordingly, this Ground of Appeal is in his finding has mentioned of relying on remand report from the Assessing Officer whereas no such remand report was called for by the Ld.CIT(A). This fact has been accepted Counsel of the assessee also. Therefore, the decision has Rustomjee group . 3981, 6305, 6282, 6281 & 3982/Mum/2017 13 Under this Ground of Appeal, the Appellant has agitated the disallowance . I have carefully considered the vis assessment order. On perusal of the same, I find that the A.O. has disallowed expenses amounting to Rs by holding that the same are required to be added to the W1I of the Project. On the other hand, I find that the Appellant is following of Accounting. It is further contended by the Appellant that the Project is on the verge of completion and therefore adding the impugned expenses to the WIP would not be justified in such circumstances. In fact, the Appellant vehemently nded that the Accounting Standard of ICAI supports their case. The Appellant further submitted that in such a scenario that the administrative expenses need to be charged off to Profit & Loss Account. I also find that on completion method issued b ICAI while presenting their case during proceedings. Apart from this, the Appellant also submitted the breakup of Revenue recognized for 4 years, sample copies of invoices; break up of costs for 4 years, value of sale deeds ecuted and documents to support expenses. However, the A.O. reiterated I have also perused detailed submissions dated 23.05.2017 and find that the S 7 & AS 16. I, therefore, find that the disallowance made by the A.O. is against the said Accounting Standards. Moreover, the documentary evidences produced during the Remand Proceedings also advances the case of the Appellant ompletion, facts of the case and the case laws relied upon by the Appellant, all favoring the treatment adopted by the Appellant for Construction Accounting. Moreover, by capitalization there is no loss or profit to the Revenue. Accordingly, the disallowance made by the this Ground of Appeal is of relying on the remand report from the Assessing Officer whereas no such remand the Ld.CIT(A). This fact has been accepted , the decision has been arrived at by the Ld. the same is set aside and matter is sent back to the Ld.CIT(A) for deciding afresh. 16. As far as appeal in the case of M/s Rustomjee Realty Pvt Ltd for A.Ys. 2012-13 2013 identical to the case of M/s Rustomjee Construction Pvt Ltd in A.Ys 2012-13 and 2013-14. Therefore, following our of Rustomjee Construction P Ltd for A.Y. 2012 decision of Ld.CIT(A) being perverse on facts, same are set aside and matter in these appeals are restored back to the file of the Ld.CIT(A) for deciding afresh following o M/s Rustomjee Construction Pvt Ltd. 17. In the result, all the appeal of the Revenue are allowed for statistical purpose. Order pronounced the ITAT Rules, 1963 on Sd/- (SANDEEP SINGH KARHAIL JUDICIAL MEMBER Mumbai; Dated: 19/01/2023 Pavanan, Sr. P.S (on contract) ITAs 3981, 6305, 6282, 6281 & 3982 been arrived at by the Ld. CIT(A) on assuming wrong facts. the same is set aside and matter is sent back to the Ld.CIT(A) for As far as appeal in the case of M/s Rustomjee Realty Pvt Ltd 13 2013-14 are concerned, findings of Ld. identical to the case of M/s Rustomjee Construction Pvt Ltd in A.Ys 14. Therefore, following our finding of Rustomjee Construction P Ltd for A.Y. 2012-13 & 2013 decision of Ld.CIT(A) being perverse on facts, same are set aside and matter in these appeals are restored back to the file of the Ld.CIT(A) for deciding afresh following our findings in the case of M/s Rustomjee Construction Pvt Ltd. In the result, all the appeal of the Revenue are allowed for Order pronounced in the open Court/under Rule 34(4) of the ITAT Rules, 1963 on 19/01/2023. Sd/- SINGH KARHAIL) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT MEMBER Rustomjee group . 3981, 6305, 6282, 6281 & 3982/Mum/2017 14 CIT(A) on assuming wrong facts. Hence, the same is set aside and matter is sent back to the Ld.CIT(A) for As far as appeal in the case of M/s Rustomjee Realty Pvt Ltd of Ld. CIT(A) are identical to the case of M/s Rustomjee Construction Pvt Ltd in A.Ys finding in the case 13 & 2013-14, the decision of Ld.CIT(A) being perverse on facts, same are set aside and matter in these appeals are restored back to the file of the ur findings in the case of In the result, all the appeal of the Revenue are allowed for under Rule 34(4) of - OM PRAKASH KANT) ACCOUNTANT MEMBER Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. The CIT(A)- 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. //True Copy// ITAs 3981, 6305, 6282, 6281 & 3982 Copy of the Order forwarded to : BY ORDER, (Sr. Private Secretary) ITAT, Mumbai Rustomjee group . 3981, 6305, 6282, 6281 & 3982/Mum/2017 15 BY ORDER, (Sr. Private Secretary) ITAT, Mumbai