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TMI Blog2016 (5) TMI 972X X X X Extracts X X X X X X X X Extracts X X X X ..... date of conversion or succession shall be allowed in the hands of the firm and expenses incurred after the conversion of succession shall be allowed in the hands of succeeding company. We find that the professional expenditure pertains to earlier period. Therefore, in respect of disallowance towards CA’s bills is justified. In respect of disallowance of wages to workers and packing credit bank loan interest, we find no merit into the contention of the assessee. Proportionate disallowance with regard to packing credit loan interest for 11 days comes to ₹ 1,29,154/-, whereas the Assessing Officer computed the same as on 31.12.2007. Accordingly, we direct the Assessing Officer to restrict this disallowance to the extent of ₹ 1, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that the preliminary expenses of ₹ 11,09,260/- actually pertained to the company itself and therefore, 20% of ₹ 11,09,260/-, which amounts to ₹ 2,21,852/- was debited to the profit and loss account u/s 35D of the Act. We find that the preliminary expenses are in respect of incorporation of the company; however, the Assessing Officer assumed the expenses for the whole year and disallowed proportionately. Therefore, no disallowance is called for in this case and the Assessing Officer is directed accordingly.- Decided partly in favour of assessee. - ITA No. 2967/Ahd/2011 - - - Dated:- 19-5-2016 - Shri Kul Bharat, Judicial Member And Shri Manish Borad, Accountant Member For the Assessee : None written sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e as per provisions of the Act. Accordingly he issued a show-cause notice dated 13.12.2010, calling upon the assessee to show cause as to why the proportionate disallowance should not be made in respect of Garment/Textile Division and Power Divison. The assessee, in response to the show-cause notice, filed a detailed reply; however, the Assessing Officer did not accept the explanation of the assessee and proceeded to make the disallowance of ₹ 10,31,448/- on account of Textile Division and ₹ 7,24,700/- on account of Power Division. The assessee, aggrieved by these two disallowances, preferred an appeal before the ld. CIT(A) who, after considering the submissions of the assessee, dismissed the appeal of the assessee. Now, the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... belongs to Abhishek Exports (India) Pvt. Ltd. It is therefore urged that proportionate disallowance of 11 days is not justified. Packing credit bank loan interest 3,63,980 The actual disallowance was discussed at ₹ 1,29,154/- on page No.4 (first two line) of the assessment order. It is submitted that, if at all disallowance is called for, it should be ₹ 1,29,154/- being proportionate expenses for 11 days. The liability of bank loan interest arose when the bank debits the interest amount in the loan account. In this case, bank had debited ₹ 3,63,980/- on 31.12.2007 and, therefore, the liability arose on 31.12.2007. It is therefore urged that proportionate disallowance of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as been succeeded therein by any other person who continues to carry on that business or profession, the predecessor shall be assessed in respect of the income of the previous year in which the succession took place upto the date of succession and the successor shall be assessed in respect of income of the previous year after the date of succession. From the aforesaid provision of Section 170 of the Act, it is clear that the expenses incurred upto the date of conversion or succession shall be allowed in the hands of the firm and expenses incurred after the conversion of succession shall be allowed in the hands of succeeding company. We find that the professional expenditure pertains to earlier period. Therefore, in respect of disallowance t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rest for ₹ 15,65,807/- on term loan was debited on 31.12.2007. Therefore, the liability of bank loan interest arose when the bank debits the interest amount in the bank account. In this case, the bank had debited ₹ 15,65,807/- on 31.12.2007 and therefore, the liability arose on 31.12.2007. We do not find force in this submission of the assessee as the interest is debited on daily basis but not on monthly basis. Therefore, the contention of the assessee in this regard is rejected, being devoid of any merit. 6.1 With regard to preliminary expenses amounting to ₹ 1,54,570/-, it is submitted that the preliminary expenses of ₹ 11,09,260/- actually pertained to the company itself and therefore, 20% of ₹ 11,09,260/ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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