2025 (6) TMI 700 - AT - Income Tax

Disallowance of Provision made for Expenses - HELD THAT - It could hardly dispute the assessee s clinching claim of crystallization thereof in the relevant previous year only. That being the case we hereby quote in National Agricultural Cooperative Marketing Federation of India 2022 (3) TMI 1331 - ITAT DELHI that such an expenditure could very well be allowed in the year of crystallization as well. The assessee succeeds in the instant sole substantive ground no. 3 in very terms. Necessary computation shall follow as per law.

Summary

The Appellate Tribunal (ITAT Delhi) heard the assessee's appeal for AY 2015-16 against the DCIT's order dated 30.12.2018 under sections 144C(13)/143(3) of the Income-tax Act, 1961. The assessee raised multiple grounds, primarily challenging disallowances of provisions for expenses and prior period expenses, including alleged violations of section 40(a)(ia).At the hearing, the assessee pressed only the third substantive ground, seeking allowance of prior period expenditure of Rs. 1,77,64,750/-, disallowed on the basis that the expenditure related to earlier years and was thus not allowable in the impugned year under section 37(1).The Tribunal noted the assessee's contention that the expenditure crystallized in the relevant previous year due to completion of formalities by the recipient. Relying on the precedent in ACIT Vs. National Agricultural Cooperative Marketing Federation of India (2022) 141 taxmann.com 108 (Del), the Tribunal held that such expenditure "could very well be allowed in the year of crystallization as well."Accordingly, the Tribunal allowed the appeal on this sole ground, directing necessary computations as per law, and dismissed other grounds as not pressed. The appeal was partly allowed.