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2016 (5) TMI 412 - AT - Income TaxApportionment of common expenses/indirect expenses between section 10(23A) segment and section 11 segment in a rational manner - Held that:- On perusal of the scrutiny assessment orders framed u/s. 143(3) of the Act by the ld.AO for the A.Ys 2010-11, 2011-12 & 2012-13, it is seen that both the revenue as well as the assessee institution had arrived at a consensus with regard to apportionment of common expenses/indirect expenses in the ratio of direct expenses incurred by section 10(23A) and section 11 segments. We find that both the revenue and assessee had tried to resolve this ongoing dispute by arriving at a consensus. Hence, by placing reliance on subsequent assessment orders passed for the A.ys 2010- 11, 2011-12 & 2012-13, we deem it fit and appropriate to follow the same as rationale for apportionment of common expenses/indirect expenses and accordingly, direct the ld.AO to follow the same for this assessment year also, which would resolve the dispute under appeal before us. - Decided in favour of revenue for statistical purpose. Provisions for arrear salary as application of income - Held that:- It is not in dispute that the assessee institution is following the mercantile system of accounting. We find that the assessee had provided for provision of salary arrears in its books based on the recommendations of the 6th Pay Commission, which got crystallised somewhere in February 2009 and treated the same as an ascertained liability by providing in its books of account. The assessee claimed the same as an application of income u/s. 11(1) of the Act. We agree with the arguments of the ld.AR that payment of salary arrears in 3 yearly installments commencing from Ays. 2009-10 to 2011-12 does not matter as far as the applicability of application of income u/s. 11(1) especially when the assessee is following the mercantile system of accounting. In view of aforesaid finding, we find no infirmity in the impugned order of the ld.CIT(A) in this regard. - Decided against revenue
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