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2016 (7) TMI 161 - AT - Income TaxDisallowance on account of prior period expenses - CIT(A) deleted the disallowance - Held that:- Bills were dated 1.4.2009 and the expenses were made in the Month of January & February, 2009. Assessee pleaded that since the assessee has received these bills during FY 2009-10 and made the payment subsequently and the AO has also not doubted the genuineness of expenses, therefore, these expenses are allowable. After going through the facts and circumstances of the present case and the orders passed by the revenue authorities alongwith the judgment of the Hon’ble Supreme Court in the case of Kedarnath Jute Manufacturing Company Ltd. (1971 (8) TMI 10 - SUPREME Court ), we are of the considered view that the assessee has received the Bills during the relevant assessment year and making the payment subsequently - Decided in favour of Assessee. Addition being legal and professional charges - Held that:- CIT(A) has rightly held that the commission paid could not be treated as capital expenditure, hence, we do not find any infirmity in the well reasoned order passed by the Ld. CIT(A) on this issue - Decided against revenue. Addition by treating the expenditure as capital expenditure - advertisement and promotion expenses - Held that:- The assessee was the original holder of publishing rights of the blender magazine. As per the JV agreement with Dennis Publishing, the assessee was supposed to develop and promote the Blender magazine and transfer it to the JV company subsequently. In view of the above, Ld. CIT(A) has rightly held that the assessee spent on advertisement and promotion and transferred the publishing right to the JV company for a sale consideration of ₹ 2.30 crore. In P&L A/c ₹ 2.30 crore was shown below the line which is taken as the profit on sale of fixed asset in the computation of income ('COI'). Similarly, gain on sale of such rights was offered in the computation income as short term capital gain. In view of the above, it was rightly held by the Ld. CIT(A) that disallowance of expenditure ignoring the income from selling of publishing right is not justifiable and addition was rightly deleted - Decided in favour of assessee.
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