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2021 (12) TMI 702 - ITAT MUMBAIAddition on payment of rent to director and wife of director u/s 40A(2)(b) - HELD THAT:- The issue is covered in favour of the assessee as ITAT in assessee’s own case [2017 (3) TMI 1053 - ITAT MUMBAI] has decided the issue in favour of the assessee. It is not the case that order of ITAT has been reversed by Hon’ble Bombay High Court. Hence, respectfully following the precedent, we uphold the order of Ld.CIT(A) - Decided against revenue. Addition of expenditure on provision for construction cost of various sites in view of mercantile system of accounting - matching concept of accountancy provision - assessee claim is that actually the expenditure is incurred in the next year, however in order to comply with matching principle/concept of accountancy, it has recognized proportionate expenditure during the year - CIT(A) deleted the additions and agreed with the assessee’s contention that in order to comply with the matching concept, the booking of the expenditure as provision was justified - HELD THAT:- As expenditure has to be accounted only when it has been incurred i.e either paid or it is accrued. If the expenditure is not accrued merely on the basis of matching principle any amount cannot be provided. The case laws referred by the Ld.CIT(A) also deal with the expenditures which have actually accrued. The Hon’ble Courts have held that expenses can be said to have been incurred only if they have accrued. Nowhere, it is provided that without accrual expenditure should be provided merely on matching concept. We note that Ld.CIT(A) has not at all given a finding that the quantum of the expenditure worked by the assessee had actually accrued. Merely because the expenditure is incurred in the next year, on the plank matching principle assessee cannot book a good portion of the expenditure during the year to adjust the profit as per its desire. Expenditure can be provided only, if the expenditure has actually accrued. Since in this case, Ld.CIT(A) has not given any finding that the expenditure has accrued, we deem at appropriate to remit the issue to the file of the Ld.CIT(A). The Ld.CIT(A) shall examine the issue afresh and give a finding whether the expenditure allowed by him can be considered to be the expenditure which is accrued during this year - With these directions, we remit the issue to the file of the Ld.CIT(A) - Appeal by the revenue partly allowed for statistical purpose.
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