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TMI Blog2023 (6) TMI 767X X X X Extracts X X X X X X X X Extracts X X X X ..... tor has taken into consideration the same as made apparent by documents available and at the end of relevant year what stood as balance was written off at the instance of Government as being waived off. CIT(A) has taken notice judgment of Hon ble Bombay High Court in Mahindra and Mahindra [ 2003 (1) TMI 71 - BOMBAY HIGH COURT] which has been later on confirmed by Hon ble Supreme Court [ 2018 (5) TMI 358 - SUPREME COURT] and given relief to the assessee. The same requires no interference. The ground raised by the department has no substance. Consequently the appeal of Revenue is dismissed. - ITA No. 1440/Del/2017 - - - Dated:- 14-6-2023 - SH. ANIL CHATURVEDI, ACCOUNTANT MEMBER AND SH.ANUBHAV SHARMA, JUDICIAL MEMBER For the Assessee : Sh. Prasun Agarwal, Adv For the Revenue : Sh. Sunita Verma, CIT-DR ORDER Per Anubhav Sharma, JM : The appeal is preferred by the Assessee against the order dated 18.12.2016 of CIT(A)-18, New Delhi (hereinafter referred as Ld. First Appellate Authority or in short Ld. FAA ) in Appeal No. 182/14-15 arising out of an appeal before it against the assessment order dated 31.03.2014 passed u/s 143(3) of the Income Tax A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... felt that the assessee has claimed prior period expenses amounting to Rs 573,802,128/-. The assessee was asked to justify the same in view of its Mercantile method of accounting being followed. The assessee vide its letter dated 06.01.2014 submitted. Regarding justification of expenses as incurred as mentioned in Annexure-VIII of the tax audit report, it is submitted that the wages salary, PF, Rent to local authorities was paid by the existing management during the year under consideration in terms of Hon ble High Court order dated 7th May, 2008. The assessee was directed to pay the same immediately. Copy of impugned order is being enclosed for your perusal and record. These expenses were crystalized / accrued during the year under consideration and were paid as per the direction /order of the Hon ble Supreme Court of India dated 13.08.2010. Detail of the prior period expenses are as under:- 3.1 The Ld. AO however held that liability to pay for the aforementioned expenses had arisen in the very year they pertain to. Accordingly, as per the mercantile method of accounting, the said expenses were deductible in those very years. It was not accepted that the said exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alue of benefit arising from business sec 28(iv) of the Act. Accordingly, the principal loan amount of Rs 68,51,00,000 was held to be taxable u/sec 28(iv). 4. Ld. CIT(A) decided the question of prior period expenses by following relevant findings : 5.2.3 During the appellate hearing, the AR submitted that this ground relates to addition of Rs.57,38,02,128/- towards payment of salary, PF, Rent/licence fee paid to employees /staff, DA/ DSIDC/ Directorate of Estates, ignoring the submissions that the same actually crystallized during the previous year under consideration. It was explained before the Ld AO that the outstanding arrears of salary wages of Rs. 42,87,92,84070/- paid to the staff was according to the scheme of revival. Arrear of wages as mentioned above and other expenses as detailed in the annexure VIII of the tax audit report was paid during the year under consideration. All expenses paid were reported by the audited as expenditure of prior debited to the profit and loss account . These expenses were crystallized/ accrued during the year under consideration and were paid as per the direction /order of the Hon'ble Supreme Court of India dated 13.8.2010. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s also held in the case of CIT v. British India Ltd. (1991) 188 ITR 44 (SC) that even if the assessee had adopted a regular system of accounting it was the duty of the AO to consider that the correct profits and gain could be deduced from the accounts so maintained. It was pointed out by the Hon'ble Supreme Court in the case of Kedarnath Jute Mfg. Co. Ltd. v. CIT (1971) 82 ITR 363 that the liability which had accrued is allowable in the year of its accrual. Similar decision was rendered in Madras Fertilizers Ltd. 209 ITR 174(Mad)(Para 27). 5. In regard to additions made on basis of loans written off the Ld. CIT(A) after taking into consideration the various judgments observed in para 5.3.18 to 5.3.22 as follows :- 5.3.18 Even in face of such conflicting view, I would go by the following judgments (apart from logitronics) from Hon ble Delhi HC, being binding on me. In CIT vs. Tosha International Ltd. 331 ITR 440 (Del), the HC held; We see no reason to interfere with the conclusion of the Tribunal as the same have been rendered on a correct appreciation of law. The principles enunciated in Mahindra Mahindra Ltd. vs. CIT [2003] 261 ITr 501 (Bom) are fully a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld. CIT(A) has erred in giving directions to the AO which entail provision of relief of Rs. 68,51,00,000/- on the loan amount sanctioned by the Government for the purpose of business. 3. The appellant craves leave to add, alter or amend any/all of the grounds of appeal before or during the course of hearing of the appeal. 7. Heard and perused the record. 8. Ld. DR supported the findings of ld. AO and submitted that Ld. CIT(A) has fallen in error in not considering the reasoned findings of Ld. AO. 8.1 On the other hand relying judgment of Hon ble Supreme Court dated 07.05.2008 and 13.08.2010, Ld. AR submitted that the quantum of amount payable to workers on account of wages/ salaries / PF etc. and sums payable to other authorities was not a liability of the assessee till it was determined by Hon ble Supreme Court. This aspect has been rightly relied by Ld. CIT(A) to benefit the assessee. 8.2 In regard to issue of written off unsecured loans receipt from the Central Government, Ld. AR submitted that Hon ble Supreme Court of India in the case of Commissioner vs. Mahindra and Mahindra Ltd. (2018) 404 ITR 1(SC) has held that waiver of loan cannot be taxed as perqui ..... X X X X Extracts X X X X X X X X Extracts X X X X
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