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2021 (9) TMI 1256 - AT - Income TaxDisallowance of deferred revenue expenditure and pre-operative expenses - expenditure incurred on opening and publicity of branches was treated as deferred revenue expenditure and pre-operative expenses in books of accounts - HELD THAT:- AO has extracted the details of proportionate deferred revenue expenses and pre-operative expenses claimed by the assessee during the year under consideration. As rightly pointed out by Ld. D.R., those expenses are in the nature of revenue expenses only. It is an admitted fact that these expenses have been incurred in an earlier year in connection of opening of branches in Mumbai and Gurgaon. In the books of account, the assessee chose to treat these expenses as deferred revenue expenses & pre-operative expenses and was claiming proportionate amount every year. The assessee has chosen to claim proportionate amount under Income tax Act also while computing total income. Under the Income tax Act, the "total income" is computed in accordance with the provisions of the Act. The issue relating to allowability of 'deferred revenue expenses' has been examined by the Ahmedabad special bench in the case of ACIT vs. Ashima Syntex Ltd. [2006 (3) TMI 188 - ITAT AHMEDABAD-B] In the instant case nature of expenses claimed by the assessee under "deferred revenue expenses/pre-operative expenses" did not result in creation of any capital asset nor they could be clearly and unambiguously identified over specified future time periods. Admitted the expenses have been incurred in the past year in connection of opening of branches and they are in the nature of revenue expenses. The claim made by the assessee during the year under consideration is part of those expenses, which was claimed as amortisation of those expenses over certain years. The principles laid down by the Special bench [supra] there is no concept of deferred revenue expenses under the Income tax Act and hence the revenue expenses incurred in an earlier year cannot be allowed as deduction during the year under consideration. The various case laws relied upon by Ld. A.R. have been rendered in a different context Principle of Consistency - As rightly submitted by Ld. D.R., the returns of income filed for earlier years have been processed u/s. 143(1) of the Act and hence there was no scrutiny of similar claims made in the earlier years by the AO. Hence the principle of consistency will not apply to this claim.- Decided against assessee.
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