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2015 (12) TMI 343 - AT - Income TaxAddition on account of income not shown in the P&L account - AO made disallowance on the basis that the expenditure could not be verified from the Gujarat Electricity Board GEB - CIT(A) delted the addition - Held that - There is no dispute with regard to the fact that GEB has confirmed the recovery of the expenses. However, the AO did not allow the expenses on the ground that GEB failed to correlate the expenses with the year under appeal. We do not find any merit into the contention of the ld.counsel for the assessee that the subject disallowance is not sustainable as the direction of the Tribunal in the earlier round of litigation was clear that the AO would verify from the books of account of the assessee about the expenditure. There is no dispute with regard to the fact that the GEB had made recovery out of the contract payment. Therefore, there is no doubt about the fact that the recovery relates to the business of the assessee. The assessee has submitted that recovery is in respect of the payments made by the GEB on behalf of the assessee. The AO has not brought any material on record suggesting that the recovery were not related to the contract payments. Under these facts, we are of the considered view that the ld.CIT(A) was justified in granting the deduction. - Decided against revenue.
Issues Involved:
Appeal by Revenue against deletion of addition in P&L account for AY 1993-94. Analysis: The appeal by the Revenue and the Cross Objection by the Assessee were directed against the order of the Ld.Commissioner of Income Tax(Appeals) pertaining to Assessment Year (AY) 1993-94. The appeal and the cross objection were taken up together. The Revenue raised grounds against the deletion of an addition in the P&L account. The facts revealed that this was the second round of litigation, where the Tribunal had earlier directed the AO to grant a deduction claimed by the assessee. However, in the subsequent round, the AO confirmed the disallowance, leading to the appeal. The Revenue contended that the assessee failed to demonstrate the expenditure related to the year under appeal, justifying the disallowance. On the other hand, the assessee's counsel argued that the direction of the Tribunal in the previous litigation was clear, and the deduction should have been granted. The AO disallowed the expenses due to lack of verification, but the CIT(A) allowed the deduction, emphasizing that the recovery of expenses cannot be treated as the assessee's income. The Tribunal analyzed the submissions, records, and orders of the authorities below. It was noted that the GEB had confirmed the recovery of expenses, but the AO did not allow the expenses as they were not correlated with the year under appeal. The Tribunal found that the recovery related to the business of the assessee, and there was no evidence to suggest otherwise. The ld.CIT(A) was deemed justified in granting the deduction, dismissing the Revenue's appeal. Consequently, the Revenue's appeal was dismissed. Regarding the Assessee's Cross Objection, the grounds raised were related to the deduction of expenses incurred by GEB on behalf of the company. However, during the hearing, the assessee's counsel expressed the decision not to press the cross-objection, which was not objected to by the ld.Sr.DR. Consequently, the cross-objection filed by the assessee was dismissed as not pressed. In the end, both the appeal of the Revenue and the cross-objection filed by the assessee were dismissed, with the order pronounced in the Court on a specific date.
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