The assessee, a real estate builder following the project completion method, incurred expenses on sales support and management services for its project and sales staff. The Assessing Officer disallowed a portion of these expenses proportionate to the percentage of the project that remained incomplete, treating the balance as part of the work-in-progress. Upholding the orders of the CIT(A) and the Tribunal, the High Court held that such expenditure was for the day-to-day running of the business and purely revenue in nature. Since the expenses did not have a direct nexus with the physical progress of the project, they were allowable as deduction in full in the year they were incurred and could not be disallowed on a proportionate basis.
(AY. 2010-11)