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TMI Blog2016 (7) TMI 741X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee’s business, the Tribunal has arrived at a decision looking into the facts and circumstances surrounding the assessee’s case. Thus, we conclude that no error has crept in the order of the Tribunal dated 30-10-2015 which can be rectified under the mandate of the provisions of Section 254(2) of the Act as there is no mistake apparent from records. Thus, in the result the miscellaneous application filed by the assessee stand dismissed. - 308/Mum/2015 Arising out of ITA No. 3123/Mum/2013, MA No. 309/Mum/2015 Arising out of ITA No.6331/Mum/2013 - - - Dated:- 13-7-2016 - SHRI C.N. PRASAD, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER For The Applicant : Shri Haresh G. Buch For The Respondent : Shri Arvind Sontakke,DR ORDER PER RAMIT KOCHAR, Accountant Member These two miscellaneous applications, filed by the assessee, being MA No.308/Mum/2015 arising out of appeal bearing ITA No. 3123/Mum/2013 and MA No. 309/Mum/2015 arising out of ITA No. 6331/Mum/2013 for the assessment years 2009-10 2010-11 respectively, the assessee has sought rectification of mistake apparent from records u/s 254(2) of the Income Tax Act,1961(Hereinafter called t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e decision of Hon ble Supreme Court in the case of Taparia Tools Limited v. ACIT (2015) (Civil Appeal code No. 6946-6948 of 2004) whereby the Hon ble Supreme Court held that the revenue expenditure is to be allowed in the year in which it is incurred. In a case where the assessee himself wants to spread the expenditure over a period of ensuing years ,it can be allowed only if the principle of Matching Concept is satisfied. It was also held by the Hon ble Supreme Court that merely because a different treatment was given in the books of account cannot be a factor which would deprive the assessee from claiming the entire expenditure as a deduction. The assessee further submitted that Hon ble Supreme Court further held that the entries in the books of accounts are not determinative or conclusive and the matter is to be examined on the touchstone of the provisions contained in the Act. The assessee submitted that the Hon ble Supreme Court also held that once a return of income is filed, the AO is bound to carry out the assessment by applying the provisions of the Act and not to go beyond the return.It is the say of the learned counsel for the assessee that the orders of the Hon ble Su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xpenses incurred which are inextricably linked to the NPA s so acquired which NPA s were already treated by the assessee as work-in-progress and hence the expenses so incurred being inextricably linked to NPA were held by the Tribunal to be the part of the work-in-progress with each NPA and transferred to Profit Loss Account only when the NPA is finally settled. Keeping in view of the peculiar factual matrix of the assessee s business, the Tribunal has arrived at a decision looking into the facts and circumstances surrounding the assessee s case. The relevant finding of the Tribunal order dated 30th October, 2015 is reproduced below:- A2. ITA No. 3123/Mum/2013 : The assessee is engaged in the business of acquiring Non Performing Assets (herein after called NPA ) from banks and financial institutions and then recover or realize the money from such loan accounts or from the assets acquired with NPA as security. The amount paid for acquiring NPA is capitalized in the books of account and any expenditure subsequent to it, relating to any particular NPA, is also capitalized with it and the same is carried forward as current asset, whereas, normal business expenses of maintaining ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... about the amount to be realized and the period during which it would be realized. In view of this the assessee wants to claim the expenses relating to recovery and maintaining of such NPAs to Profit Loss Account as revenue expenditure. Assessee has practical difficulties in valuing such NPAs because it is not certain as to how much will be the realization and when. It may be difficult to even partially realize the revenue or determine the profit. Therefore the assessee is not crediting Profit Loss Account with recovery as and when made whereas that is transferred to NPA A/c. and only at the end, net profit or loss is transferred to the Profit Loss Account. Therefore the expenditure incurred during the recovery process relates to the recoveries which are to be accounted for in the NPA account either in this year or in future whenever the recoveries are made. Therefore, as per matching principle of accountancy they are not matching with the revenue realized before the NPA is settled. Such expenditure should be treated as work-in-progress with each NPA and transferred to Profit Loss Account only when the NPA is finally settled. Accordingly CIT(A) was justified in rejecting the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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