ITA No.2961/Mum/2024 and ITA No.2960/Mum/2024

Parties Involved

Facts Summary

The assessee, Siroya Developers Pvt Ltd, is a developer with ongoing residential projects. The assessee had made an agreement with Abhyudaya Co-operative Bank Ltd for the construction of a building on the land belonging to the assessee company. The assessee followed the 'project completion method' for recording profits after the completion of the project. The revenue raised issues regarding the method of revenue recognition and the disallowance of interest expenditure claimed under section 36(1)(iii) of the Income Tax Act. The assessee filed an appeal before the Commissioner of Income Tax (Appeals) which was allowed. The revenue filed appeals before the Income Tax Appellate Tribunal, which were dismissed.…

Legal Issues

• 1. Whether the Ld. CIT(A) was justified in deleting the addition made under section 36(1)(iii) of the Income Tax Act without appreciating the fact that the assessee made huge interest free advances from interest bearing funds.
• 2. Whether the Ld. CIT(A) was justified in deleting the addition made under Percentage completion method without appreciating the fact that the project has been substantially completed and a significant percentage of the total saleable area was sold out.

Judgment Outcome

Decided in favour of Revenue.

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