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TMI Blog2019 (2) TMI 285X X X X Extracts X X X X X X X X Extracts X X X X ..... but claimed in the impugned assessment year. In case of certain expenses, the bills were submitted in subsequent years. CIT(A) confirmed the addition stating that the assessee has not furnished the evidence supporting it’s claim that the expenditure was crystallized during the year under consideration. Therefore, we deem it fit to remit the case back to the file of the CIT(A) with a direction to allow the expenditure, crystallized during the year as per the business practice followed by the assessee regularly. Accordingly, the order of the CIT(A) is set aside and the appeal of the assessee is remitted back to the file of the CIT(A) to reconsider the issue afresh on merits and to allow the expenditure as and when it is crystalized as per the business practice regularly followed by the assessee. Appeal of assessee is allowed for statistical purpose. - I.T.A.No.451/Viz/2017 - - - Dated:- 1-2-2019 - SHRI V. DURGA RAO, JUDICIAL MEMBER AND SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER For The Appellant : Shri G.V.N.Hari, AR For The Respondent : Shri D.K.Sonowal, CIT DR ORDER PER D.S. SUNDER SINGH, Accountant Member: This appeal is filed by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... previous years due to reasons beyond the control of the company. The assessee further submitted that in the case of large undertakings like HSL, involving innumerable transactions, laid down certain procedures involving many rules and regulations and there will be delay in clearing and processing of bills/claims etc. hence could not be claimed in the relevant years and claimed in subsequent years, in which the bills have been processed adhering to the procedures. In support of the claim of the assessee relied on the decision of CIT Vs. Marshall Sons Co.(I) Ltd. (1995) (124 CTR 213) and Addl.CIT Vs. Jay Engineering Works Ltd. (1979) (113 ITR 389). The AO considered the submissions of the assessee and observed that the assessee is following mercantile system of accounting and as per the system of accounting followed by the assessee, the assessee has to claim the expenditure as well as the income on accrual basis. The AO further observed that the income has to be computed each year independently and every year is an independent unit and expenditure relatable to the earlier years cannot be debited in the subsequent years. Therefore, following the decision of M.S. Raju Vs. DCIT 298 ITR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s claimed as deduction after the receipt of the bills and the expenditure was ascertained. Therefore, submitted that the expenditure is genuine, not claimed in the earlier years, hence requested to allow the same in the year under consideration. 7. On the other hand, Ld.DR supported the orders of the Ld.CIT(A) and argued that on verification of the paper book submitted by the assessee certain entries clearly shows that though the expenditure was crystallized in the earlier years, the assessee has claimed the same in the year under consideration. Therefore, argued that there is no interference is called for in the order of the Ld.CIT(A) and the same is to be upheld. 8. We have heard both the parties and perused the material placed on record. In this case, the assessee has claimed the expenditure under prior period adjustment and argued that the expenditure was crystalized in the year under consideration after completion of the necessary procedures followed by the assessee company. Though the assessee is following the mercantile system of accounting and the income and expenditure required to be determined on accrual basis, expenditure cannot be claimed as deduction or allowed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the employees/branch employees were received after 31st March of the financial year. It has also come as a matter of fact that the assessee has branch offices throughout the country. The assessee has been debiting the expenditure spilled over to the subsequent years and the AO had been allowing the same. The said accounting practice has been consistently followed by the assessee and accepted by the Department. If a particular accounting system has been followed and accepted and there is no acceptable reason to differ with the same, the doctrine of consistency would come into play. The said accounting system has been followed in a number of years and there is no proof that there has been any material change in the activities of the assessee as compared to the earlier years. Nothing has been brought on record to show that there has been distortion of profit or the books of account did not reflect the correct picture, in the absence of any reason whatsoever, there was no warrant or justification to depart from the previous accounting system, which was accepted by the Department in respect of the previous years. 8.1. Similarly in the case of Saurashtra Cement Chemical Industri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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