2006 (3) TMI 92 - HC - Income Tax

1. Whether Tribunal is right in law in holding that the expenditure being the cost of goods given to the depositors at the time of accepting deposits received under the DLIP scheme, being deferred revenue expenditure as revenue expenditure? - question is answered in the negative, i.e., in favour of the Revenue - 2. Whether, Tribunal is right in law in holding that Form No. 6 signed by a person other than the person entitled to sign as required under section 140 as valid? - the accountant who has signed Form No. 6 was the duly authorised representative of the respondent. Even otherwise, if there is no such authorisation he shall file such an authorization within four weeks. If such an authorisation is filed within four weeks from the date of receipt of a copy of this order, the authority shall act on such authorisation and treat the application filed in Form No. 6 as a valid one and made by a person who is duly authorised in that behalf.

Summary

Issues:
1. Classification of deferred revenue expenditure as revenue expenditure.
2. Validity of Form No. 6 signed by an accountant.

Analysis:
1. Deferred Revenue Expenditure: The court addressed whether the expenditure incurred by the assessee, being the cost of goods given to depositors under the DLIP scheme, should be classified as deferred revenue expenditure or revenue expenditure assessable for the relevant assessment year. The court referred to a similar case where the question was reframed to determine if the business activity was prohibited by law, affecting the deductibility of the expenditure. Relying on the previous decision, the court ruled in favor of the Revenue, stating that the expenditure should not be considered as revenue expenditure for the assessment year.

2. Validity of Form No. 6: The second issue revolved around the validity of Form No. 6 signed by the accountant of the respondent for extending the date of filing the income tax return. The court examined the relevant provisions of the Income-tax Act and Rules regarding the signing of returns and applications for extension. It was highlighted that the application for extension could be filed by a person authorized by the assessee, not necessarily the assessee themselves. The court referred to a previous case where it was held that a lack of initial authorization could be rectified during the proceedings by submitting a letter of authority. Consequently, the court ruled in favor of the assessee, stating that the accountant's signature on Form No. 6 was valid. It was further clarified that if there was no prior authorization, the accountant should file such authorization within four weeks for the application to be considered valid.

In conclusion, the court disposed of the reference by providing detailed analysis and rulings on both issues, clarifying the classification of expenditure and the validity of Form No. 6 signed by the accountant.