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TMI Blog2020 (1) TMI 987X X X X Extracts X X X X X X X X Extracts X X X X ..... books of accounts particularly when the demand raised on the basis of the sales made during the accounting year the assessee entitled to deduct the amount of sales tax on the basis of the liability incurred and even in the absence of entries in the books of accounts, the same is admissible. The expenditure is not to be disallowed merely because it related to earlier previous year. In short under mercantile system of accounting the liability is allowable in the year it crystallized and thus the claim of the assessee seems to be justified and hence allowable See SAURASHTRA CEMENT AND CHEMICAL INDUSTRIES [ 1994 (10) TMI 30 - GUJARAT HIGH COURT] . The addition made in this respect is, therefore, deleted. Addition towards amount receive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order dated 30.12.2011 passed by the JCIT, Gandhinagar Range, Gandhinagar for Assessment Year 2009-10. Ground No. 1:- 2. Disallowance under section 14A of the Act ₹ 1,88,087/- as per provision of Rule 8D. Ground No. 2:- 3. Disallowance of prior period expenses ₹ 26,40,010/- while calculating income under the normal provision of the Act. Ground No. 3:- 4. Addition of ₹ 14,92,00,000/- towards amount received on account of advance against depreciation. Ground No. 4:- 5. Levy of interest under section 234D and recovery of interest under section 244A of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judgment passed in the matter of Cadila Pharmaceutical Ltd. reported in 25 taxman 519, the said judgment has no manner of application. Rather, he relied upon the judgment passed in the matter of Kedarnath Jute Mfg. Co. Ltd.-vs-CIT reported in 82 ITR 363 (SC). On the other hand, Ld. DR relied upon the order passed by the authorities below. 11. Heard the respective parties, perused the relevant materials available on record. It appears from the records that while rejecting the case of the assessee, the Learned AO observed that the assessee is following mercantile system where expenditure is recorded if it is due during the previous year irrespective of fact whether it is paid during the previous year or no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d determined particularly when the mercantile system of accounting is practiced by the assessee. The expenditure is not to be disallowed merely because it related to earlier previous year. In short under mercantile system of accounting the liability is allowable in the year it crystallized and thus the claim of the assessee seems to be justified and hence allowable. The addition made in this respect is, therefore, deleted. 14. Ground No.3: The addition of ₹ 14,92,00,000/- towards amount received on account of advance against depreciation which has been upheld by the Learned CIT(A) has been challenged before us. 15. At the time of hearing of the instant appeal the Learned Sr. Counsel appearing fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... term liability and was to be adjusted in respective years. However, the Learned CIT(A) has been pleased to direct the Learned AO to verify the claim of the appellant in the event the appellant is able to prove that any income has been taxed in the subsequent assessment year is in fact adjusted against advance of ₹ 14.92 crores, such income would not be liable to be taxed in the year in which the appellant company has shown any income. Being aggrieved by the same the assessee is before us. 16. We have heard the respective parties perused the relevant materials available on record. In terms of the power projects agreement as it appears from the records the appellant company has been raising invoices to Gujart Urja Vik ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would not be liable to be taxed in the year in which Appellant has shown any income. Thus, the related ground of appeal is partly allowed. However, it is the case of the assessee that such advances to be adjusted with the power so supplied in the future. We, thus, having regard to the facts and circumstances of the case find no infirmity in the order passed by the Learned CIT(A) in making such direction upon the Ld. AO with the guidelines framed therein in order to grant relief to the assessee if permissible under the law, so as to warrant interference. Hence, we confirm the order passed by the Ld. CIT(A). 17. In the result, assessee s appeal is partly allowed. This Order pronounced i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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