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TMI Blog2015 (11) TMI 1442X X X X Extracts X X X X X X X X Extracts X X X X ..... udication. 3. Vide its ground no.2 to 4, grievance of the revenue is that the CIT(A) deleted an addition of Rs. 44,42,893/- made by the AO on interest paid on unsecured loans. As per the revenue, the CIT(A) had misinterpreted the judgment of Hon'ble Madras High Court in the case of Madras Fertilizers Ltd Vs CIT (1993) 209 ITR 174. 4. Facts apropos are that the assessee operating a Multiplex Theatre in Bharath Mall, had filed its return of income for the impugned assessment year on 01-10-2010 declaring a total income of Rs. 95,59,410/-. During the course of assessment proceedings the AO noted that a sum of Rs. 88,85,787/- was charged as interest in the P&L account. Since there was no similar charge of interest in the preceding assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per the learned AO the judgment of the Apex Court in the case of Swadeshi Cotton & Floor Mills (P) Ltd., 53 ITR 134(Supra) was in relation to a liability arising on declaration of bonus and was entirely different on facts. Learned AO also noted that the question before Hon'ble Himachal Pradesh High Court in the case of CIT Vs Himachal Pradesh State Forest Corpn.320 ITR170(HP)(Supra) was liability to pay interest on belated payment of royalty, and therefore, the facts were entirely different. As for the judgment of Hon'ble Allahabad High Court in the case of M/s Apollo Textiles Agency(2006cadill) 283 ITR 591(Supra), learned AO was of the opinion that the question there was the liability of expenditure u/s 43B of the IT Act, 1961 on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arned CIT(A) also went through the e-mail copies produced by the assessee. He held that the claim of interest even for the preceding year was allowable. He deleted the disallowance. 8. Now before us, learned DR strongly assailing the order of the CIT(A) submitted that it was not a contractual liability. Assessee had never produced any contract which it had with the loan creditors that could show that there was any accrual of any interest expenditure. The claim was based on choice. No doubt, as per the learned DR, assessee had obtained letters from the loan creditors threatening withdrawal of the amounts unless the interest was paid from the date of the investments. However, as per the learned DR, this would not show that there was any lega ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al interest outgo pertained to preceding year. Assessee has also not disputed the claim of the revenue that there was no contract with the creditors for payment of any interest. However, as per the assessee it had taken a decision during the relevant previous year, in the meeting of its Board of Directors held on 23-03-2010 to pay interest from 01-04-2008 at the rate of 7%. Assessment order states that assessee could not produce any evidence regarding any dispute that share holders/directors on the question of interest. No doubt, assessee is relying on a resolution of its Board of Directors for payment of interest. Nevertheless, we are of the opinion, that at least some of the records produced by the assessee before the CIT(A) were not befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al liability which accrued and crystallized during the relevant previous year. As per the assessee, there was a dispute with M/s Bharath Mall, whose premises it was using for running the theatre and such a dispute was resolved only during the relevant previous year leading to the payment of extra cam charges. However, the AO was of the opinion that no evidence was produced by the assessee with regard to dispute with M/s Bharth Mall or for resolution of such dispute. He held that prior period expenditure could not be allowed. Reliance was placed on the judgment of the Hon'ble Madras High Court in the case of M/s Madras Fertilizers Ltd (Supra). 12. In its appeal before the CIT(A), argument of the assessee was that assessee was a joint ve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rath Mall and such dispute, if it existed, whether settled, require a detailed analysis before coming to a conclusion regarding the allowability of the claim made by the assessee. Unless and until such an exercise is carried out, it cannot be ascertained whether the claim is one of prior period expenditure or business expenditure incurred during the relevant previous year. In such circumstances, we are of the opinion that this issue also requires a fresh look by the AO. We therefore, set aside the orders of the authorities below and remit the issue regarding allowance of prior period expenditure of Rs. 10,07,484/- also back to the file of the AO for consideration afresh in accordance with law. Ground no.5 to 6 of the revenue is treated as a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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