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TMI Blog2015 (7) TMI 1235X X X X Extracts X X X X X X X X Extracts X X X X ..... sue for A.Y. 2005-06, 2006-07 & 2010-11 is accordingly allowed. Disallowance of prior period expenses - AO disallowed an amount claimed as business promotion expenses on the ground that the same pertained to the period prior to the assessment year under consideration - Held that:- CIT(A) correctly relying upon the decision of the ITAT Delhi Bench in the case of “Goetze India Ltd. vs. CIT” [2007 (7) TMI 341 - ITAT DELHI-C] held that since the quantum of actual liability was crystallized during the year under consideration, hence the expenditure was allowable during the current year. He, therefore, deleted the disallowance. - Decided in favour of assessee - ITA Nos. 616 to 618/M/2014 - - - Dated:- 2-7-2015 - R. C. Sharma (Accountant Mem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #39;ble Supreme Court in the cases of Sarvana Spinning Mills 293 ITR 201 and Shree Mangayar Karasi Mills 315 ITR 114. 4. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in allowing the prior period expenses in current year without appreciating that the expendi ture of preceding year cannot be al lowed in the cur rent year by contravening the principle of mercantile system of accounting. 5. For these and other grounds that may be urged at the time of hearing, the decision of the CIT(A) may be set aside and that of the AO restored. Ground No.1 to 3 3. A perusal of the ground Nos.1 to 3 reveals that the Revenue has contested the finding of the Ld. CIT(A) holding that the expenditure on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to restore the issue to the file of the AO with the direction to decide the issue afresh and in accordance with law. 4. In the set aside proceedings, the AO again disallowed the said expenditure holding the same as capital in nature. Being aggrieved, the assessee preferred appeal before the Ld. CIT(A). Before the Ld. CIT(A), the assessee filed a detailed explanation that the expenditure incurred by the assessee on repairs and maintenance of furniture and fixtures of the business centre was made for the business requirement of running the business centre as the assessee has to incur the said expenditure for making the business centre premises suitable to the clients business. It did not give any enduring benefit to the assessee. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT (A) or not. 9. Considering the above facts and also considering the decision of Hon'ble Rajasthan High Court in the case of CIT vs. A.M. Singhvi, 302 ITR 26 wherein it was held that even if the substantial amount is spent on repairs and renovation of office premises taken on rent, it is to be allowed as revenue expenditure because no capital asset is acquired by the assessee. Hence, we hold that there is no infirmity in the order of Ld. CIT (A). Therefore, we uphold his order by rejecting the grounds of appeal taken by the department. 10. In the result, appeal of the department is dismissed. 5. The Ld. CIT(A) applying the same ratio as decided by the Tribunal in the own case of the assessee on the identical issue allow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to the period prior to the assessment year under consideration. 8. In appeal, the assessee explained to the Ld. CIT(A) that the bill of ₹ 2,44,800/- though pertained to the preceding year was received by the assessee in the current year which was not disputed by the AO. Since the bill was received this year, hence the liability was crystallized during the year under consideration. The Ld. CIT(A), relying upon the decision of the ITAT Delhi Bench in the case of Goetze India Ltd. vs. CIT 115 ITD 119 (ITAT Del.), held that since the quantum of actual liability was crystallized during the year under consideration, hence the expenditure was allowable during the current year. He, therefore, deleted the disallowance. 9. The Ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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