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2022 (7) TMI 250 - AT - Income TaxDisallowance on account of prior period expenses - assessee contended that the said commission actually became payable only when the proceeds in respect of the corresponding sales were actually realized in the year under consideration - HELD THAT:- As rightly contended by the learned Sr. DR, when the assessee was following the mercantile system of accounting, the commission payable on the corresponding sales made in the earlier year at an agreed rate could have been and should have been provided by the assessee-company in that year itself as the liability for the same was ascertainable with greater certainty. Moreover, when the corresponding sales were duly accounted for in the earlier year and recognized as income, the commission payable in respect of the said sales at an agreed rate should have been claimed as deduction by the assessee in that year itself going by matching principle. There is also nothing brought on record to establish that the liability for the said commission pertaining to the earlier year had arisen and crystallized in the year under consideration - sale promotion and sale commission expenses pertaining to the earlier were not allowable in the year under consideration being prior period expenses and the deduction claimed by the assessee for the same is not allowable either in law or even in the facts of the case. We accordingly restrict the disallowance made by the AO and confirmed by the CIT(A) on account of prior period expenses. Unutilized CENVAT and Service Tax credit written off - HELD THAT:- Amounts in question representing the unutilized CENVAT and Service Tax credit cannot be considered as trade debts of the assessee and deduction for the same on being written off cannot be allowed under Section 36(1)(vii) r.w. Section 36(2) - Even the learned Counsel for the assessee has not been able to dispute this position. She, however, has contended that these two amounts having become irrecoverable, the same should be allowed as deduction under Section 37 of the Act being the business loss. She, however, has not been able to bring anything on record to establish that the unutilized CENVAT and Service Tax credit amount in question had become irrecoverable during the year under consideration so that the same can be allowed as business loss in that year. We, therefore, find no infirmity in the impugned order of the learned CIT(A) confirming the disallowance made by the Assessing Officer on this issue and upholding the same. We dismiss Ground No.2 of the assessee’s appeal.
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