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TMI Blog2015 (10) TMI 732X X X X Extracts X X X X X X X X Extracts X X X X ..... uction during the instant year only since the assessee has deducted TDS during the current year. As the assessee submitted that it is declaring income on completion of flats for accounting the income from building activities. If that be the case, the construction expenses will have been shown as Work in progress only in the immediately preceding year and the same would have been allowed as deduction only in the year in which the flats are sold. In that angle also, the impugned expenses may not fall in the category of “Prior period expenses”. - Decided in favour of assessee. - I.T.A. No.7122/Mum/2012 - - - Dated:- 20-8-2014 - SHRI B.R.BASKARAN (AM) AND VIVEK VARMA,JJ. Appellant by : Shri Vimal Punmiya Respondent by : Shri M R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Assessee submitted following explanation : With reference to the above, it is submitted that the contractor A M Construction did not do justice to his job. There were lots of defects in the jobs executed by him, like the plaster of the walls was uneven, there were waves and major cracks here and there. So there was a dispute and the company refused to make any further payment to A M Constructions. This being the first project, the company was very much worried about its image and company was deciding to hand over the whole work to be redone by some other contractor. In the meantime, with the effort of R D Builders, the contractor viz. A M Constructions came around and agreed to redo the entire work again to our satisfaction. So ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same got quantified and ascertained. Therefore, since the liability accrued in the year when it got ascertained, the assessee became entitled to claim deduction in that year I would also like to mention that even Delhi High Court- In the case of CIT v/s Vishnu Industrial Gases Pvt Ltd (ITR No 229/1988) and in the case of CIT v/s Shri Ram Pistons and Rings Ltd (ITR No.133/1991) has held - By referring Bombay High Court Case (33 ITR 681) that: Merely because an expense relates to an transaction of an earlier year it does not become a liability payable in the earlier year unless it can be said that the liability was determined and crystallized in the year in question on the basis of maintaining accounts on the mercantile basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... He further submitted that the opinion expressed by the Tax Auditor in the Tax Audit Report cannot be considered as sole determinative factor in deciding the year to which the impugned expenditures relates. The ld. AR further submitted that the Assessee has also deducted TDS from the above said payment during the current year. The ld. AR further submitted that even if the impugned expenditure is considered as relating to immediately preceding year for a moment, the same is liable to be disallowed u/s 40(a)(ia) of the Act since the assessee had not deducted tax at source from the said payment and it is required to be allowed during the current year, since the Assessee had deducted the TDS during the current year only. The ld. AR also invited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2008. Thus, it is seen that the assessee did not acknowledge its liability to pay the amount to the Contractor, vide its letter dated 24.02.2008. When the assessee is disputing his liability to pay the amount, in our view, it is not correct on the part of the tax authorities to impose the said liability on the assessee, unless it is shown that the assessee had acknowledged the liability by 31.3.2008. In the instant case, there is no material to show that the assessee had acknowledged the liability by 31.3.2008. Since the contractor has raised the bill on 30-06-2008 and both the parties have agreed for the said amount by that date, the liability relating to the above bill gets crystallized only on 30-06-2008 and accordingly, in our view, it ..... X X X X Extracts X X X X X X X X Extracts X X X X
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