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2017 (11) TMI 1051 - AT - Income TaxNature and genuineness of the expenditure - addition prior period expenditure - system of accounting - Held that:- AO has not examined the nature and genuineness of the impugned expenditure. He has simply disallowed for the reason that the assessee is following mercantile system of accounting and the deduction can be allowed in respect of only those expenses which are incurred in the relevant accounting year of computing the profits and gains. Thus, he had not examined the nature and genuineness of the expenditure at all. In the view of that we are of the considered opinion that the AO has to examine the nature and genuineness of the expenditure and decide the issue in accordance with law following the ratio CIT vs. Jagatjit Industries Limited [2010 (9) TMI 58 - DELHI HIGH COURT]. To that extent, the revenue’s appeal is treated as allowed.
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