In a recent ruling, the Pune ITAT upheld that the lift cost of ₹72.69 lakh should be included as part of the work-in-progress (WIP) under the percentage completion method, rejecting prior period expense claims. This ruling reinforces the treatment of project-related costs for tax assessments.
Pune ITAT Allows Lift Cost as Part of Project WIP
The Pune ITAT has determined that a ₹72.69 lakh lift expense is rightly classified under the work-in-progress (WIP) of a real estate project and disallowed its treatment as a prior-period expense. The ruling supports the percentage completion method of accounting employed by the taxpayer.
The tribunal clarified that costs incurred while developing a project must be accounted for within the period they were incurred, promoting the inclusion of such expenditures in the WIP. The ITAT underscored the rationale for recognizing all relevant expenses that contribute to the overall progress of a project, rather than confining them to previous accounting periods.
This decision provides clarity for tax practitioners regarding the accounting treatment of project-related costs, emphasizing adherence to the percentage completion method. Developers should ensure that all direct costs related to project execution are properly capitalized to optimize tax management and compliance.
Citations
- Pune ITAT (2026) ITAT/124
