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2016 (2) TMI 1146 - ITAT MUMBAIAddition made under section 43B - assessee has paid service tax in advance before availing the corresponding services - Held that:- The assessee has debited the amount of ₹ 22.91 crores to the profit and loss account pertaining to the assessment year under consideration also. Since the amount of ₹ 22.91 crores has been allowed in the assessment year 2006-07 and dispute relating to the same has attained the finality, the assessee is precluded from claiming the same again in the assessment year 2007-08. Accordingly, we are of the view that the AO was justified in disallowing the same in the year under consideration. Accordingly, we set aside the order of ld.CIT(A) passed on the issue relating to ₹ 22.91 crores and direct the AO to add the same on substantive basis. With regard to the balance amount of ₹ 2.93 crores added by the AO, we notice that the ld. CIT(A) has restored the matter to the file of the AO for considering the same afresh in the light of decision rendered by him in the assessment year 2006-07. Since the matter has been restored to the file of the AO for fresh consideration, we do not deem it necessary to interfere with his order on this issue. In the assessment year 2008-09, we notice that the ld. CIT(A) has restored the matter to the file of the AO with a direction to examine the same afresh in the light of the decision rendered by him in the assessment year 2006-07. Hence, we decline to interfere with the order of ld. CIT(A) in this year also as the AO has been directed to examine the issue afresh. Disallowance made u/s 14A - Held that:- Considering the fact that the assessee has made investment in one company only, that the investment was made long back, that the assessee has received dividend from that company only, we are of the view that the disallowance computed at 0.5% of the investment value of shares is reasonable, in the facts and circumstances of the case. Disallowance of prior period expenses - Held that:- It is a well settled proposition of law that the income relating to one year cannot be assessee in any other year. Under the same principle, the expenditure relating to one year cannot be claimed in any other year. Both the principles shall have exception, if it is expressly provided in the Act. Hence, we are of the view that the tax authorities are not justified in disallowing entire amount of prior period expenses, while assessing the entire amount of prior period income, without bringing support of any of the provisions of the Act. Accordingly, we are of the view that the assessee was justified in computing the disallowance by netting off the prior period income against the prior period expenditure. We further notice that the assessee has offered net income in assessment year 2007-08, i.e., the prior period income was more than the period expenditure. We direct the AO to accept the disallowance/ computation made by the assessee in this regard. Addition made u/s 145A in respect of MODVAT amount- Held that:- We set aside the order passed by Ld CIT(A) on this issue in assessment years 2007-08 to 2010-11 and restore them to the file of the AO with the direction to examine the same afresh in all the four years under consideration, by duly considering the information and explanations furnished by the assessee. With regard to the deposit made with Port Trust, we make it clear that the same is not includible in the computation made u/s 145A of the Act, if it does not fall in the category of tax, duty, cess or fee levied under any law. Hence, the same shall be liable to included in the adjustments made u/s 145A of the Act, only if it is shown that the payment was made under authority of any law. Further, if the deposit so made is refundable to the assessee, then also the question of including the same u/s 145A does not arise.
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