Court held that the unsold flats that had been surrendered to the assessee were part of its stock-in-trade. In view of Accounting Standard 2 the compensation paid subsequent to the completion of the project was an “extraordinary item”. It was not “cost” of completion of the project and, therefore, such compensation could not be added to the value of the stock-in-trade of the assessee. Accounting Standard 2 governs valuation of inventories. “Cost” comprises all of the costs of purchase, costs of completion and other costs incurred “in bringing the inventories to their present location and condition”. That which was not relevant to bringing the stock to its present condition or location cannot be a part of its value. The mere fact that the space buyer’s agreement or the allotment letter did not mandate payment of compensation would not come in the way of the assessee treating such payment as “revenue expenditure”. The assessee had a plausible explanation for making such payment of compensation to protect its “business interests”. While it was true that there was no “contractual obligation” to make the payment, it was plain that the assessee was also looking to build its own reputation in the real estate market. Further the mere fact that the recipients treated the payment as capital gains in their hands in their returns would not be relevant in deciding the issue whether the payment by the assessee should be treated as “business expenditure”. The payment made by the assessee to the allottees of the flats for their surrendering the rights therein should be allowed as business expenditure of the assessee. That Accounting Standard 2 would apply to interest and guarantee commission and, with the assessee following the completed contract method, the expenditure incurred subsequent to the completion of the project could not be attributed to work and had to be allowed only as revenue expenditure.) That the service charges were incurred after the completion of the project and would not be part of the capital work-in-progress. Having been incurred at a stage subsequent to the completion of the project it had to be shown as revenue expenditure and was rightly allowed as such by the Tribunal. (AY. 1995-96  to 2009-10)