Tribunal held that Accounting Standard 7 provides that the selling and administrative costs are required to be excluded from the contract costs while drawing financial statements. Hence, the action of the assessee was in line with the parameters of Accounting Standard 7. Expenses incurred in the normal course of business are required to be allowed after setting up of business irrespective of whether the revenue was earned. The action of the assessee in any case was a revenue neutral affair and the Revenue was not put to any tax loss per se by such premature claim.( AY.2012-13)
Pragnya Crest Properties Pvt. Ltd. v. Dy. CIT (2020) 78 ITR 43 (SN)(Bang) (Trib)
S.37(1): Business expenditure — Real estate development — Selling and administrative costs — Selling expenses – Revenue expenses after setting up of business is held to be allowable although revenue was not yet earned —Accounting Standard 7 .