2015 (7) TMI 320 - AT - Income Tax

Addition on account of non-accounting of receivable warehousing charges on accrued basis - CIT(A)deleted the addition - Held that -.CIT(A) has decided the issue following the earlier orders for A.Y. 2003-04 and A.Y. 2004-05 wherein seen that the appellant did not receive the increase in storage rent ultimately and the godowns were vacated by the Post Master General subsequently on 31-10-2005. It was an increase made unilaterally by the appellant which was not accepted by the tenant. The increase in rent became disputed, so it cannot be held that the rent has accrued to the appellant. In view of the facts of the case as the disputed income has not been received by the appellant and the same has been written off in the F.Y. 2005-06, there is no question of accrual of additional rental income therefore the addition of the said amount is deleted. The Revenue has not placed any material on record suggesting that the facts in the present case are different than the earlier years. - Decided against revenue. Addition on account of prior period expenses - CIT(A)deleted the addition - Held that - Since there is no change into the facts and circumstances of the case as the Tribunal restored this issue to the file of ld.CIT(A), therefore this year also, we deem it proper to restore this issue back to the file of ld.CIT(A) to decide the same afresh in the light of the decision of the Coordinate Bench passed 2012 (4) TMI 567 - ITAT AHMEDABAD . - Decided in favour of revenue for statistical purposes.

Summary

Issues:
1. Deletion of addition of Rs. 3,16,584 on account of non-accounting of receivable warehousing charges.
2. Deletion of addition of Rs. 21,19,856 on account of prior period expenses.

Analysis:

Issue 1:
The first ground of appeal pertains to the deletion of the addition of Rs. 3,16,584 on account of non-accounting of receivable warehousing charges. The Revenue contended that the deletion by the CIT(A) was unjustified as the assessee followed the mercantile system of accounting. However, the CIT(A) upheld the deletion based on previous orders and lack of evidence suggesting a change in circumstances. The Tribunal also referred to a previous decision for a similar assessment year where the claim for revised warehousing charges was not accepted, leading to the deletion of the addition. The Tribunal found no reason to interfere with the CIT(A)'s order, thus rejecting the Revenue's appeal on this ground.

Issue 2:
The second ground of appeal focused on the deletion of the addition of Rs. 21,19,856 on account of prior period expenses. The Revenue argued that the prior period expenses claimed in the balance sheet were impermissible, and the CIT(A) erred in deleting the addition. However, the CIT(A) supported the deletion based on the crystallization of the expenses during the relevant year, following a similar decision from a previous assessment year. The Tribunal, considering the previous decision where the issue was remitted back to the CIT(A), decided to remit the issue back to the CIT(A) for fresh consideration in light of the previous decision. As there were no changes in the facts and circumstances of the case, the Tribunal allowed the Revenue's appeal on this ground for statistical purposes.

General Grounds:
Ground Nos. 3 & 4, being general in nature, required no separate adjudication. The Tribunal partly allowed the Revenue's appeal for statistical purposes. The order was pronounced in court on June 19, 2015, at Ahmedabad.

This detailed analysis of the judgment highlights the key issues, arguments presented by the parties, decisions made by the CIT(A) and Tribunal, and the final outcome of the appeal.