TMI Blog2010 (5) TMI 849X X X X Extracts X X X X X X X X Extracts X X X X ..... ered the material available on record. 3. In the assessment year 2003-04 it was noticed by the AO that the assessee had debited ₹ 83,08,212/- to the profit loss account for the expenditure pertaining to earlier year. The assessee had itself disallowed ₹ 76,05,745/- in the computation of income and balance amount of ₹ 7,02,567/- was claimed as allowable. It was explained before the AO that the liability for such payment has been crystallized during the year under consideration and it was eligible for deduction. The claim of the assessee was not accepted by the AO because no evidence was produced to show expenses crystallized during the year. The claim of the assessee was rejected. It was briefly explained before the le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... certain machinery at Mundra and unless the certificate of completion of all the works was obtained, the claim could not be admitted. On the bill itself it was noticed that certificate of completion of dismantling/erection was given in the month of May, 2002 which falls in the accounting period relevant to the assessment year under appeal i. e. assessment year 2003- 04. The learned CIT(A) on the basis of the material on record found that this amount of prior period expenditure had crystallized during the year under consideration. Therefore, it is to be allowed as deduction. The amount which crystallized during the assessment year under appeal was allowed as deduction. 4. In the assessment year 2004-05 the assessee made similar submission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any 73 ITR 53 held that liability accrued during the year would be considered for the purpose of deduction. The Hon ble Allahabad High Court in the case of CIT Vs Appollo Textiles Agency held as under: (283/ITR/591) The assessee dealt in staple and yearn. For the assessment y8ear 1978-79, it claimed ₹ 15,498 representing additional demand for sales tax liability on it for the earlier years. The authorities below disallowed the claim but the Tribunal held that the demand of sales tax was the additional demand created by the sales tax authorities on November 2, 1976, and therefore t4he additional demand created in the relevant assessment year ought to have been allowed as a deduction. On a reference at the instance of the Revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent year in question. Similarly, in assessment year 2004-05 the payment to employees was made based upon the performance of the employees in the earlier year. The liability crystallized during the assessment year in question, because the working of the incentives based on performance was cleared for payment in the month of July, 2003 which falls during the assessment year under appeal i.e. assessment year 2004-05. Since the liability to pay the expenditure crystallized during the assessment year under appeal, therefore, the learned CIT(A) was justified in deleting the addition. The learned DR has not produced any material contrary to the findings of the learned CIT(A). Thus, the Revenue has failed to rebut the findings of the learned CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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