1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.646 OF 2008 The Commissioner of Income Tax Central-II. ...Appellant vs. K.Raheja Pvt.Ltd. ...Respondent. --- Mr.D.A.Athavale, for appellant. Mr.J.P.Mistry with Ms.Vedpathak i/b. Maneksha & Sethana, for Respondent. CORAM: D.K.DESHMUKH & J.P.DEVADHAR, JJ. DATED: 21st October,2008. P.C.:- 1. The revenue has raised two questions which read thus:- (i) Whether on the facts and the 2 circumstances of the case and in Law the Hon'ble ITAT was right in holding that claim made by the assessee for deduction of Finance Cost by way of interest is in conformity with the Accounting Standard-7 issued by the Institute of Chartered Accountants of India and the exemptions provided therein? (ii) Whether on the facts and circumstances of the case and in law the Hon'ble ITAT was right in deleting the disallowances made on account of interest of Rs.94,70,835/- without appreciating the facts that- i) It is the duty of the assessee to prepare the books of accounts in such a manner that expenses relatable to a particular income can accurately be identified and income can be correctly computed. In fact, it is the sole purpose of maintaining the books of accounts. The assessee maintained 3 the books of accounts violating the principle of matching concept of income and expenditure. Therefore, the assessee cannot be allowed to take advantage of its own omission/ commission? ii) It is also well settled that matter of taxability of an income is not decided on the basis of entries which the assessee may choose to record in its accounts. The non-inclusion of interest expense in work-in-progress of project violates the basic principle of matching concept of matching income vis-a-vis expenditure and thereby distorts the income disclosed by the assessee? The finding of fact recorded by the Tribunal is that there is no identity between a particular borrowing and a particular line of business and there is no basis for coming to a conclusion that interest attributable to the loans should be appointed amongst 4 the various business activities of the assessee and the portion attributable to the construction activity should be deferred and made a part of the work in progress to defer the interest expenditure till completion of the project. In our opinion, the issue raised in this appeal are squarely covered by the judgment of this Court in the case “Commissioner of Income Tax vs. Lokhandwalal Construction Inds.Ltd, reported at 260 ITR 579”. In this view of the matter, therefore, we see no merit in the appeal, the appeal is dismissed. (D.K.DESHMUKH, J.) (J.P.DEVADHAR, J.)