2023 (3) TMI 404 - AT - Income Tax

Addition of prior period expenditure - AO had considered the fact that the expenditures are allowable on accrual basis - HELD THAT:- CIT(A) on facts and law following order of co-ordinate bench in DCIT-6, Kanpur vs. UP State Handloom Corporation Ltd. [2014 (11) TMI 1268 - ITAT LUCKNOW] wherein it was held that if any disallowance is required to be made in regard to it, same can only be made with respect to net prior period expenses debited to the profit and loss account of the current year. Reliance in this regard can also be placed on the judgment in PCIT-7 vs. M/s. Mazagaon Dock Ltd. [2019 (8) TMI 1860 - BOMBAY HIGH COURT] wherein as sustained the findings of Tribunal for netting of prior period income against prior period expenses. No interference is required. The ground is decided against the Revenue.

Disallowance of staff welfare expenses - based on the opinion reported in 3CD report, the disallowance was made as the expense was not actually incurred - HELD THAT:- During the year under consideration, Ld. CIT(A) seems to have been carried with the fact that as expenditure was allowed in previous years, same should be allowed on principal of consistency but as every assessment is independent and if no evidence is on record to show that out of this reserved created to meet an exigency, at any point of time in the past or in the present year an expenditure has been incurred towards payment of compensation to the pilot, then the on principal of consistency alone allowing it is not justified. Thus, Bench is inclined to allow this ground of appeal in favour of Revenue.

Provision for maintenance expenses, obsolescence of spares and redelivery - HELD THAT:- As the matter of fact is that in assessee’s own case for A.Y. 2006-07. [2017 (12) TMI 1857 - ITAT DELHI] the issue has been decided in favour of the assessee by following co-ordinate Bench judgment in ACIT vs. M/s. ACIT-5(2), Mumbai vs. Jet Airways (I) Ltd. [2010 (10) TMI 1243 - ITAT MUMBAI] which is also being relied by the Ld. CIT(A). Ld. DR could not cite any distinguishing fact or question of law involved, thus, this ground is decided against the revenue.