9911796707
TMI Blog2016 (6) TMI 1356X X X X Extracts X X X X X X X X Extracts X X X X ..... in gunny bags procured from DFS Haryana, has been created by the assessee amounting to ₹ 20.11 lacs with no underlying agreement supporting the creation of the charge. No such document has been produced before us, even after a specific query raised by the Bench in this regard. Clearly the assessee has not been able to establish incurring the liability in the first place. Therefore no question arises of incurring the expenses what to say about creating a provision of the same. The provision of section 37(1) are very clear and it is settled law that onus is on the assessee to establish having incurred any expenditure. Having failed on this ground alone, we therefore hold that the assessee is not entitled to claim allowance of expendi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 20,11,000/- for the impugned year. On being confronted about the allowability of the same, the assessee submitted that the same was payable to the Food Supplies Department, Government of Haryana and had been provided on accrual basis. The assessee further stated that in Assessment year 2008-09 when no such provision had been made, an objection had been made by the C AG in their comments and the Assessing Officer had proposed to add the expenses on this issue since the same was not provided on accrual basis, while no such adverse observation had been made by the C AG in their comments on this issue in the impugned year. Thus the assessee submitted that the service charges having been provided on accrual basis be allowed. The AO rejected ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accordance with the provision of Income Tax Act only. Thus the Ld. CIT(A) held that in view of the applicability of the provision of section 145 A regarding the valuation of goods and the various jurisdictional pronouncements relating to overriding provisions of Income Tax Act, the provision for service charges made on procurement of gunny bags amounting to ₹ 20.11 lacs was not allowable. 5. Aggrieved by the same the assessee filed the present appeal before us. 6. Before us Ld. AR reiterated the submissions made before the lower authorities and stated that the provision for service charge on gunny bags had been made on accrual basis on the amount of gunny bags received in the impugned Assessment year. Ld. AR drew o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowability of provision created in the books of the assessee for service charge payable on gunny bags. It is imperative at this juncture to understand the position of law with regard to allowability of expenses. Deductions can be permitted only in respect of expenses which are found to have been incurred in the relevant accounting period. The determination of the question whether the assessee had incurred the expenditure during the relevant accounting period is an indispensable preliminary step. The principles that should normally be followed are well settled by the decision of the Supreme Court in Kedar Nath Jute Manufacturing Co. Ltd. Vs. CIT (1971) 82 ITR 363(SC) namely in order to be entitled to deduction, the expense must be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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