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Issues involved:
The issue involves the admission of an additional ground raised by the assessee regarding the expenditure incurred and shown in the balance sheet for a different assessment year. Summary: The High Court considered the case where the assessee had incurred an expenditure of Rs. 13,10,566 as business expenditure, which was shown as a prior period expense in the balance sheet for the assessment year 2003-04, but actually pertained to the assessment year 2001-02. The assessee did not raise this issue before the Assessing Officer or the Commissioner of Income-tax (Appeals). When the assessee sought to raise this additional ground before the Income-tax Appellate Tribunal, it was declined on the basis that the accounts were audited and finalized before the order was passed by the CIT(A). The Tribunal relied on previous decisions and held that since the facts were not before them, they could not adjudicate the claim. The counsel for the assessee argued that even though the expenditure was genuine, the assessee could not benefit from it for either assessment year. Referring to a decision by the Kerala High Court, the counsel contended that the Tribunal should have remanded the matter to the Assessing Officer to investigate and determine the facts rather than declining to permit the additional ground. In line with the Kerala High Court's view, the High Court answered the substantial question of law in favor of the assessee and remanded the matter to the Assessing Officer to determine the claim on its merits. The appeal was disposed of accordingly.
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