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2011 (1) TMI 1415 - DELHI HIGH COURTDeduction u/s 35D - Allowability of expenditure for establishing the business of manufacturing and sale of Beer and Cold Drinks - assessee wanted this expenditure to be spread over for a period of ten years as according to him, this expenditure need to be amortized for the aforesaid period - claimed deduction of the entire expenditure in the same year i.e. the assessment years 1995-96 but claimed only 10% thereof as deduction in that year. HELD THAT:- The ball was set in motion in the assessment year 1995-96 when the assessee was allowed to claim deduction at the rate of 10% of the total expenditure incurred by it for four years i.e. for the assessment years 1995-96 to 1998-99 the assessment have become final. Thus, 40% of the lump sum amount incurred in the first assessment year has been allowed as deduction at the rate of 10% in each of these years. That is the factual situation prevailing. Upsetting the apple cart in the middle and challenging the course of action by treating these expenditure under Section 35 D of the Act would clearly be impermissible. It may also noted that with interest, that for the assessment years 2002-03 again deduction at the rate of 10% of the said expenditure has been allowed. In these circumstances, apart from the fact that in the year 1995-96, the issue was gone into by the Assessing Officer by applying his mind, we are of the opinion that this course of action cannot be adopted for few assessment years, whereas assessment in respect of five assessment years has already become final. If this is allowed, it will lead to anomalous and absurd situation, inasmuch as, the same expenditure which was incurred in the year 1995-96 has been given one treatment, namely, the Department has allowed it to be spread over and gave the benefit of deduction at the rate of 10% for five years and in respect of some expenditure incurred much earlier, for the remaining year, the department seeks to apply the provisions of Section 35 D of the Act. This is clearly impermissible. The order of the Tribunal cannot and should not be interfered - Appeal dismissed.
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