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TMI Blog2021 (7) TMI 981X X X X Extracts X X X X X X X X Extracts X X X X ..... estricting the addition of Rs. 8,17,696/- to 2,87,351/- resulting in deletion of Rs. 5,30,345/- made on account of prior period expenses ignoring the fact that the prior period expenses had not been debited to Profit & Loss Account in the year when those were incurred." 4. "The Appellant craves, leave or reserving the right to amend, modify, alter, add or forego any of the Ground(s) of Appeal at any time before or during the hearing of this appeal." 2. Briefly stated facts of the case are that the assessee is a public sector undertaking of Government of India under the administrative control of Ministry of Information Technology. For the year under consideration, the assessee filed return of income on 29/09/2011, declaring total income of Rs. 1,45,96,030/- which was further revised to Rs. 8,16,09,300/- on 20/03/2013. The scrutiny assessment under section 143(3) of the Income-tax Act, 1961 (in short 'the Act') was completed on 29/03/2014 after making disallowance of Rs. 3,96,72,870/- under section 14A of the Act and disallowance of prior period expenses of Rs. 26,16,106/-. The Ld. CIT(A) deleted both these disallowances. Aggrieved, the Revenue is in appeal before the Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers the question framed by holding that the expression "does not form part of the total income" in Section 14A of the envisages that there should be an actual receipt of income, which is not includible in the total income, during the relevant previous year for the purpose of disallowing any expenditure incurred in relation to the said income. In other words, Section 14A will not apply if no exempt income is received or receivable during the relevant previous year." In the light of above stated facts and following the judgment of Jurisdictional High Court as given in the case of Cheminvest Ltd. (supra), and also the order of the CIT(A) in appellant's own case in A.Y. 2007-08 and 2008-09 as mentioned above as facts are similar in this year as well, the disallowance made u/s. 14A of the Act in this case is hereby deleted." 5.1. Before us, the Learned DR relied on the order of the Assessing Officer, whereas Learned Counsel of the assessee relied on the order of the Learned CIT(A). 5.2. We have heard rival submission of the parties on the issue in dispute. We find that during the year, no exempted income was received by the assessee and therefore, following the finding of the Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bills were verified by the appellant's engineer and forwarded to the Accounts Department in April 2010 and therefore the expenditure was claimed in the year under reference. The appellant however could not furnish details in respect of other expenses of Rs. 1,07,730/- and no details for the depreciation claimed in the year of. Rs. 1,79,621/- were furnished. As the appellant has given due justification for the expenses debited in respect of stores and spares of Rs. 1,55,855/- and expenses in respect of sub contract of Rs. 3,74,490/-, I am of the considered view that the same needs to be allowed to the appellant. The addition to this extent is hereby deleted. As appellant has not been able to justify the other items of expenditure claimed, the addition of Rs. 2,87,351/- (Rs. 1,07,730/- + Rs. 1,79,621/-) is therefore, confirmed." 6.1. Before us, the Learned DR relied on the order of the Assessing Officer and submitted that the assessee failed to demonstrate that liability crystallized in the year under consideration. 6.2. On the other hand, the learned Counsel of the assessee relied on the order of the Learned CIT(A) and submitted that identical issue has been decided in favour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... foresaid sum had arisen in the earlier previous year and not in the relevant previous year and as the assessee maintained the accounts on mercantile system, the same was not allowable expenses of the previous year in question. 10. From the statement of the case and the order of the Tribunal it appears that the contention of the assessee was that the expenditures in dispute were incurred in the year under consideration because they were quantified in the previous year concerned, and the Commissioner (Appeals) rest contended by saying that when the expenses related to the earlier accounting years, how each of these expenses could be quantified in the year of consideration. The Tribunal affirmed the disallowance by observing that there is no dispute that the assessee-company maintained its books of account on mercantile basis. It was observed that if that is so, there was no justification in claiming these expenses for the assessment year under appeal. Having considered the material on record, we do not find any justification for the disallowance of the claim of the assessee on such abstract proposition. Merely because an expense relates to a transaction of an earlier year it does n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the 1961 Act. The question related to the claim of deduction on account of the sales tax liability paid during the year 1957-58, whereas the liability related to the accounting year 1949-50. The Division Bench in that case observed as under: "...Under section 4 of the Income-tax Act, the income that accrues or arises during any previous year alone is to be taken note of. There is, therefore, a bar to include any income that accrues or arises outside the previous year subject to the deeming provisions in the Act. There is, however, no express bar in law, nor one by necessary implication, restricting the power of the Income-tax Officer to exclude the expenditure laid out or expended under section 10(2) (xv) of the 1922 Act. We are, therefore, unable to accede to the submission of the learned counsel for the department. Section 10(2) (xv), shorn of other details for our purpose, provides for making allowances of any expenditure 'laid out' or 'expended'. The words 'laid out' are with reference to the mercantile system while the word 'expended' is with regard to the cash system. Once there was the sales tax demand in this case, which was an enforceabl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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