2010 (4) TMI 1195 - HC - Income Tax

Summary

Issues:
1. Delay in re-filing the appeal.
2. Disallowance of training expenses by the Assessing Officer.
3. Disagreement between the Assessing Officer and the Commissioner of Income Tax (Appeals) regarding the treatment of training expenses.
4. Decision of the Income Tax Appellate Tribunal on the treatment of training expenses.
5. Whether the entire training expenses should have been allowed as revenue expenditure.

1. Delay in re-filing the appeal:
The High Court, in CM 3841/2010, condoned the delay in re-filing the appeal for reasons stated in the applications and based on the submissions made on behalf of the appellant. The delay was thus considered and disposed of.

2. Disallowance of training expenses by the Assessing Officer:
The Assessing Officer disallowed a portion of the training expenses claimed by the assessee, amounting to Rs. 20,96,127, for the assessment year 1998-99. The reason provided was that the benefit of these expenses was spread over five years, leading to the disallowance of 4/5th of the expenditure for subsequent years.

3. Disagreement between the Assessing Officer and the Commissioner of Income Tax (Appeals) regarding the treatment of training expenses:
The Commissioner of Income Tax (Appeals) disagreed with the Assessing Officer's decision and deleted the disallowance of training expenses. The Commissioner held that the entire expenditure should be allowed as revenue expenditure, as the assessee followed the mercantile system of accounting.

4. Decision of the Income Tax Appellate Tribunal on the treatment of training expenses:
The Income Tax Appellate Tribunal upheld the decision of the Commissioner of Income Tax (Appeals) regarding the treatment of training expenses. The Tribunal agreed that since the Assessing Officer had accepted the expenditure as revenue expenditure, there was no basis for disallowing a portion of it.

5. Whether the entire training expenses should have been allowed as revenue expenditure:
The High Court, after considering the arguments and findings of the Tribunal, dismissed the appeal. It was noted that no perversity was pointed out, and no substantial question of law arose for consideration. Therefore, the Tribunal's decision to allow the entire training expenses as revenue expenditure was upheld, and the appeal was dismissed accordingly.