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2022 (5) TMI 1343 - AT - Income TaxRectification u/s 154 - adjustment towards prior period expenditure by way of rectification resulting in increase in the assessed income - HELD THAT:- We find palpable merit in the plea of the assessee that there is no bar per se for claim of prior period expenses as revenue expenditure in appropriate factual matrix in the light of the decision of the Hon’ble Supreme Court in the case of CIT vs. Hero Cycles Pvt. Ltd. [1997 (8) TMI 6 - SUPREME COURT]. The Hon’ble Delhi High Court in the case of CIT vs. Jagjit Industries Ltd. [2010 (9) TMI 58 - DELHI HIGH COURT] has held that the claim of prior period expenses is permissible in the given factual matrix. On a broader reckoning, it is plain and simple that mere claim of prior period expenses in a relevant assessment year cannot be disallowed outright without examining the factual matrix. - in the case of Hero Cycle (supra) has inter alia observed in paragraph 3 of the judgment that “Rectification under section 154 of the Act can only be made when glaring mistake of fact or law has been committed by the officer passing the order becomes apparent from the record. Rectification is not possible if the question is debatable. Moreover, the point which was not examined on facts or in law cannot be dealt as mistake apparent on the record. The dispute raised a mixed question of fact and law. Thus the action of the Assessing Officer is clearly without jurisdiction to invoke Section 154 of the Act with a view to engage in making adjustments on such debatable issues in an abstract manner. The action of the Assessing Officer is thus without sanction of law and requires to be reversed. Increase in the assessed income on account of provision for leave encashment outstanding as on date of filing of return - We concur with the contentions raised on behalf of the assessee without any demur. The Assessing Officer could not have enhanced the assessed income towards provision for leave encashment by way of rectification under Section 154 of the Act at the relevant time contrary to judgment rendered by Hon’ble Calcutta High Court . [2007 (6) TMI 175 - CALCUTTA HIGH COURT] under Section 154 of the Act. The action of the Assessing Officer is thus reversed and position of the assessee is restored. Appeal of assessee allowed.
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