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| The Tax Publishers2019 TaxPub(DT) 2929 (Del-Trib) INCOME TAX ACT, 1961
Section 37(1)
Expenses incurred by assessee by giving assured returns to customers from whom capital was received should form part of capital project. Thus, expenditure towards assured returns would be capitalized /shown as work-in-progress.
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Capital or revenue expenditure - Assured returns paid on capital investment - Alleged that expenditure incurred before commencement of construction business -
Assessee-company was engaged in the business of construction of commercial buildings. AO alleged that as the assured returns were paid by assessee to the customers from whom capital was received before commencement of construction business, it should be capitalised. However, assessee claimed said expenditure as revenue in nature. Held: Expenses incurred by assessee by giving assured returns to customers from whom capital was received should form part of capital project. Thus such expenditure towards assured returns would be capitalized /shown as work-in-progress and was not considered to be in the nature of selling cost.
REFERRED : CIT v. M/s. Dhoomketu Builders & Development (P) Ltd. (2014) 368 ITR 680 (Del) : 2013 TaxPub(DT) 1760 (Del-HC)
FAVOUR : Against the assessee
A.Y. : 2009-10
INCOME TAX ACT, 1961
Section 37(1)
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