Disallowing expenses already capitalized in the valuation of closing work-in-progress results in double taxation, which is impermissible in law. General business promotion expenses are admissible as revenue expenditure when they are not specific to a project.

आदेश / O R D E R

PER S.R.RAGHUNATHA, AM:

2. At the outset, it is observed that the appeal filed by the Revenue is barred by limitation, there being a delay of 53 days in its presentation. We have carefully considered the reasons set forth by the Revenue in support of the delay. Upon due consideration of the explanation furnished, we are satisfied that the delay occurred on account of sufficient and reasonable cause, which prevented the Revenue from filing the appeal within the prescribed period of limitation. In view of the foregoing, and in the interest of substantial justice, the delay of 53 days in filing the appeal is hereby condoned. Consequently, the appeal is admitted for adjudication on merits in accordance with law.

3. The Revenue has raised the following grounds of appeal:

1. The order of the learned CIT(A) is contrary to the facts and circumstances of the case.

2. The Ld.CIT(A) has erred in deleting the disallowance of Rs.2,12,67,685/- made on account of labour expenses when the assessee failed to disclose the work in progress in the ITR as well as audit report.

3. The Ld.CIT(A) has erred in deleting the disallowance of advertisement expenses amounting to Rs.85,39,079/- which does not relate to the completed project.

4. The Ld.CIT(A) has erred in deleting the disallowance of other expenses amounting to Rs.3,19,754/- which does not relate to the completed project.

5. For these and other grounds that may be adduced at the time of hearing, it is prayed that the order of the Ld.CIT(A) may be set aside and that of the Assessing Officer be restored.

4. The brief facts of the case are that the assessee is a partnership firm engaged in the business of construction. For the year under consideration, the case of the assessee was selected for scrutiny under the Computer Assisted Scrutiny Selection (CASS), and notice u/s.143(2) of the Act was issued on 03.09.2014. Subsequently, the assessment was completed u/s.143(3) of the Act vide order dated 29.03.2016, wherein the AO determined the total income of the assessee at Rs. 4,90,64,690/- as against the returned income, inter alia, by making the following disallowances:

i. Disallowance of labour expenses amounting to Rs. 2,12,67,685/-;

ii. Disallowance of advertisement expenses amounting to Rs. 85,39,079/-; and

iii. Disallowance of other expenses amounting to Rs. 3,19,754/-.

5. Aggrieved by the aforesaid additions/disallowances made by the AO, the assessee preferred an appeal before the Ld.CIT(A). The Ld.CIT(A) vide impugned order dated 09.07.2024, allowed the appeal of the assessee and deleted the additions made by the AO.

6. Being aggrieved by the relief granted by the Ld.CIT(A), the Revenue is in appeal before us challenging the correctness of the impugned order in so far as it relates to the deletion of the aforesaid additions. None appeared for the assessee, however the submissions were made by the assessee’s ld.AR during the earlier hearings.

7. We have carefully considered the written submissions filed by both the parties and perused the material available on record. Accordingly, the grounds of appeal raised by the Revenue are adjudicated hereunder:

8. Ground Nos. 1 and 5 being general in nature and not raising any specific grievance, do not call for separate adjudication. Accordingly, the same are treated as dismissed.

9. Ground No.2 raised by the Revenue pertains to the deletion of the disallowance of Rs.2,12,67,685/- on account of labour expenses allegedly not relatable to the completed project.

10. Upon careful consideration of the