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2011 (12) TMI 376 - AT - Income TaxDisallowance of Rs.1,78,562 being prior period adjustments - held that:- The entire dispute thus hinges on the question as to the previous year in which liability to pay has crystallized and there is no dispute about admissibility of the claim per se - Once the books of accounts of the assessee are closed and it is not possible to provide for an expense on the basis of subsequent information coming to the assessee, the assessee cannot claim it in the year in respect of which books are closed. It is not a case of double deduction and the amounts involved are relatively insignificant - the assessee's claim for expenses, even though strictly speaking these expenses pertain to the preceding year, are eligible for deduction in this year that is the year in which liability has crystallised and bills are received - Appeal is allowed. Regarding disallowance of Y2K expenses - revenue or capital expenditure - Held that: as a result of insertion of Section 36(1)(xi), with effect from 1st April 2000, all the Y2K expenses are allowable - whether capital or revenue, but merely because this section came into effect from 1st April 2000, it cannot be inferred that even revenue expenses, which were otherwise eligible for deduction under section 37(1), were to be treated as inadmissible in the earlier assessment years even when there is no specific finding, backed by cogent reasons, to the effect that such Y2K expenses are capital in nature - In the present case, the expenses are only for systems testing and consultancy charges and there is no material whatsoever, except for pointing out that these are 'once in a millennium expenses', that these expenses are capital expenses - Appeal is allowed
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