9911796707
TMI Blog2020 (12) TMI 1150X X X X Extracts X X X X X X X X Extracts X X X X ..... ]. 2. The facts relating to the issue are discussed in brief. The original assessment for the year under consideration was completed by the AO on 26-08-2011 u/s. 143(3) r.w.s. 144C of the Act. The above said assessment order was revised by Ld CIT (LTU) u/s. 263 of the Act and hence the AO passed re-assessment order u/s. 143(3) r.w.s. 263 of the Act. The issue under dispute relates to the addition of Rs. 5,53,30,473/- made by the AO. 3. The Ld CIT (LTU) noticed that the assessee had disallowed a sum of Rs. 24,77,29,455/- in the earlier year u/s. 40(a)(i)/(ia) of the Act, but claimed the above said amount fully as deduction during the year under consideration. The Ld CIT took the view that the assessee is required to substantiate the said c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee, thereafter, gave a detailed reply to Ld CIT(A) explaining the modalities of passing accounting entries. It was submitted that the reversal of provision for expenses results in reduction in the amount of concerned expenditure. It was also submitted that the amount so reversed is not taxable, since it represents the amount disallowed in the earlier year. The Ld CIT(A) was convinced with the explanations given by the assessee. Accordingly, he deleted the impugned disallowance. Aggrieved, the revenue has filed this appeal. 5. The Ld D.R. supported the order passed by the AO by submitting that the assessee has failed to show evidences for the amount of Rs. 5,53,30,473/- disallowed by the AO. 6. The Ld A.R. submitted that the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 9.71 crores as deduction in the immediately preceding year, the same is not taxable as income, when it is credited to the expenditure/profit & loss account. Accordingly, the assessee claimed the amount of Rs. 9.71 crores as deduction. Out of the above said provision amount, the assessee could relate the expenditure accounted for in AY 2007-08 to the extent of Rs. 4.17 crores. Hence the AO has assessed the same as income for want of evidences. The Ld A.R. submitted that the yearend provisions are made on estimated basis and hence there bound to be difference between the amount so provided for and the bill amount. Hence it is difficult to make one to one linking of exact amounts. In any case, remaining amount of Rs. 5.54 crores represents ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubjected to tax under the Act. In the instant case, the assessee has disallowed the provision amount of Rs. 9.71 crores while computing total income for AY 2006-07, meaning thereby, the assessee has not claimed the amount of Rs. 9.71 crores as deduction in AY 2006-07. The assessee has reversed the entire amount of Rs. 9.71 crores in the year relevant to AY 2007-08 by crediting the same to expenditure account/P & L a/c. Out of the amount so reversed, the assessee has incurred expenses to the tune of Rs. 4.17 crores. The assessee has not incurred expenses for the balance amount of Rs. 5.54 crores and hence it has increased the profit/total income of the assessee. Since it was not claimed as deduction in AY 2006-07, the same cannot be subjecte ..... X X X X Extracts X X X X X X X X Extracts X X X X
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