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2013 (4) TMI 285 - ALLAHABAD HIGH COURTDis-allowance of prior year expenses as the assessee has been following mercantile system of accounting - Held that:- Merely because an expense relates to a transaction of an earlier year it does not become a liability payable in the earlier year unless it can be said that the liability was determined and crystallized in the year in question on the basis of maintaining accounts on the mercantile basis. In each case where the accounts are maintained on the mercantile basis it has to be found in respect of any claim, whether such liability was crystallized and quantified during there previous year so as to be required to be adjusted in the books of account of that previous year. There is no finding as to why the liability for the expenses accrued to the appellant by any of the authorities. It is the case of the appellant that liability for expenses for which claim was made in the profit and loss account of the year under consideration had crystallized only during the year and as such, no claim towards the same was made in the account of the earlier years. There is also no finding as to why the claim of the appellant for prior years for the reasons aforesaid was not allowable. Under these circumstances, the matter remitted back to the Tribunal for recording a finding of fact as to whether the expenditure which has been claimed by the assessee in the revised computation of income has actually been crystallized during the assessment year under consideration, after giving opportunity of hearing to the parties concerned.
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