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2016 (2) TMI 76 - ITAT BANGALOREDisallowance of prior period expenses - Held that:- From the details filed by the assessee, it appears that some of the expenditure pertains to the salary revision of the employees. The assessee has claimed that due to revision of salary, the liability on account of enhanced salary has been crystallized only during the year under consideration. Since the details of expenditure filed by the assessee do not throw much light on this fact that the expenditure pertaining to enhanced liability towards pay to the employees on account of revised salary were finalized and crystallized only during the year under consideration, accordingly, in the facts and circumstances of the case, as well as in the interest of justice, we remand this issue to the record of the AO with a direction to the assessee to furnish better particulars for examination of the AO and accordingly the claim of the assessee has to be decided as per law. Addition on ad hoc upfront premium received by the assessee under the concession agreement with three parties - Held that:- When the assessee claims to have followed the accrual basis of accounting and recognizing the income on accrual basis then this very fact of recognizing the entire upfront premium as income in the books of account shows that the entire receipt accrued during the year under consideration. Though the C&AG has raised some objections in his Audit report in respect of recognizing the entire income as income of the year under consideration and recommended only proportionate amount of upfront premium to be considered as income of the year under consideration, however, the said remarks of the C&AG would not change the character or the incidence of accrual of the income. No error or illegality in the orders of the authorities below in treating the entire upfront premium received by the assessee as income for the year under consideration. Disallowance on account of provision for accounting and auditing - Held that:- There is no dispute that audit of the accounts by the C&AG is a definite requirement as well as a certain procedure of conducting the audit by the audit team. Therefore, there is no question of any contingency in respect of said expenditure except the fact that the audit has to be done only post closure of the accounts. If the assessee is following this practice consistently, then it is revenue neutral because every year this expenditure is required to be allowed. Accordingly, if the assessee is following this practice consistently then the said expenditure cannot be disallowed for a particular year. In the facts and circumstances of the case, this issue is set aside to the record of the AO with the direction to verify whether the assessee is following this practice of recognizing the expenditure of the audit fee pertaining to each year irrespective of the actual payment then, it should not be disallowed for the year under consideration.
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