ITO Vs. PANCHVATI DEVELOPERS
INCOME TAX APPELLATE TRIBUNAL
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N.V. Vasudevan, J.M. -
(1.) ITA 5655/Mum./2005 is an appeal by the revenue and ITA 5090/Mum./2005 is an appeal by the assessee. Both these appeals are directed against the order of learned Commissioner (Appeals) XII, Mumbai, relating to assessment year 2002-03.
(2.) The common issue that arises for consideration in these appeals is as to whether any disallowance of expenditure while computing the total income of the assessee towards Cost of Purchase of Right of Way and Purchase of Additional FSI for two projects known as "Madhuban" and "Millennium Gardens" could be made and if so what is the quantum of disallowance that should be made.
The assessee is a firm engaged in the business of Civil Construction, i.e., Builder and Developer of properties. It follows the project completion method of accounting, i.e., it offers income from a particular project to tax only on completion of the project. During the previous year it completed two projects viz., "Madhuban" and "Millennium Gardens" and offered to tax income from the aforesaid two projects.
(3.) WHILE computing its income from the aforesaid two projects, it claimed to have incurred the following expenditure and claimed the same as deduction:
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