Case Law Details
DCIT Vs Omega Shelters Private Limited (ITAT Hyderabad)
ITAT Hyderabad held that expenditure incurred for construction/acquisition of new facility which was subsequently abandoned at work-in-progress stage was allowable in year of write off as incurred wholly and exclusively for purpose of business.
Facts-
AO noted from the notes on accounts that during the year under consideration the assessee company surrendered the ‘Neighborhood apartments’ project and the total cost incurred aggregating to Rs.7,57,24,129/- had been considered by the assessee company as a sunk cost and debited to profit and loss account. The said expenditure of Rs.7,57,24129/- incurred by the assessee on the “Neighborhood Apartments” project was claimed against the gross profit of Rs.11,75,65,798/- earned by the assessee on the “Neighborhood Villas” project thereby reducing the profit from “Neighborhood Villas” project by Rs. 7,57,24,129/-.
AO was not satisfied with the explanation given by the assessee and made an addition of the amount of Rs.7,57,24,129/- to the total income of the assessee.
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