Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2016 (1) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2016 (1) TMI 1456 - AT - Income TaxDisallowance of prior period expenses - entire claim of prior period expenses is in respect of liability crystallized during the year and claim is in conformity with past history of the case - HELD THAT:- The assessee is a government undertaking. The assessee has been following mercantile system of accounting, as per which all items of income and expenditure are treated as accrued, only after the approval is granted by the competent authority. This system has been followed consistently in respect of both income and expenditure items. The system followed has been accepted by the department in the immediate preceding year. Therefore, in our view, it will not be appropriate to disturb the regular system being followed by the assessee. Moreover, the revenue has already accepted the same basis adopted regarding the accrual of income and, therefore, different standards cannot be followed in respect of expenditure incurred in relation to the same income as it would give a distorted picture of the profit of the year. The ld.CIT(A) has also allowed the claim in part in his order. As AR has submitted that the issue may be sent back to the ld.AO for verification to an extent of ₹ 67,99,614/-. DR does not object to this preposition, d by the ld.AR. Accordingly we set aside this ground to the ld.AO for verification and to allow the same following the principle of consistency. This ground raised by the assessee therefore stands statistically allowed. Addition being in the nature of contingent claim without proper appreciation of facts or legal principles - HELD THAT:- As the amount has not been crystallized the same cannot be treated as income in the hands of the assessee. The assessee being a Government undertaking has been following a system of accounting as per which all items of income and expenditure are treated as accrued only after the approval is granted by competent authority. This system has been followed consistently in respect of both income and expenditure items which has not been disputed by the Revenue in any of the preceding years. Therefore, we are of the considered opinion that the addition confirmed by the CIT(A) is without any basis and needs to be deleted. Income had accrued or received during the year under reference - addition as accrued interest income on dues from Iraq - HELD THAT:- As perused assessee has only realeased a total amount of ₹ 166.62 crores at an interest of ₹ 6% p.a. We are, therefore, inclined to delete the addition confirmed by the ld. CIT(A) to an extent of ₹ 71.26 crores as interest on the basis of the above discussions.
|