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2012 (12) TMI 662 - AT - Income TaxPrior period expenditure - Power Lines Service charges excluded in the valuation of the current assets - hand over of power lines to KEB free of cost - whether assessee can claim the expenditure incurred by it for the earlier assessment years as a deduction of expenditure of the relevant assessment year - Held that:- The assessee has earned income from the said power lines and the same has also been offered in the years of receipt. By treating the expenditure as work-in progress, the assessee in the year in which the power lines are to be handed over in K.E.B, free of cost, has to set off the work-in progress, from the profits of the relevant year as the assessee is no longer going to earn income out of the said power lines. By debiting the expenditure to profit and loss account and credibility the closing stock, it is clear that the assessee has not claimed this expenditure as deduction in the earlier years. As held by the Hon’ble Courts in CIT Vs. Standard Radiators Pvt. Ltd [2005 (12) TMI 70 - GUJARAT HIGH COURT] wherever there is a change of method of accounting, for genuine reasons, there is every chances of claim of double deduction arising during the year on change of accounting. The necessity and the crystallization of the liability during the relevant period is to be consider for allowing the expenditure. Thus as the assessee has not claimed the expenditure in the earlier years and there is no claim of double deduction in the relevant assessment year & the assessee who has changed the method of accounting due to genuine reason of having to hand over the power lines to KEB can claim the expenditure relating to earlier years in this year, even if it results in double deduction - in favour of assessee.
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