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2020 (12) TMI 1029 - AT - Income TaxDisallowance of licence fee - system of accounting - accrual of expenditure - HELD THAT:- When the assessee was granted the liquor licence for financial year 2006-07 i.e. Assessment Year 2007-08 he has claimed it as expenditure in the Profit & Loss Account of Assessment Year 2007-08. We are of the considered view that since the expenditure of licence fees has crystallized during Financial Year 2006-07 (Assessment Year 2007-08), the assessee has rightly claimed it as an expenditure against revenue of assessment year 2007-08. Issue of cash system/mercantile system of accounting is not having any impact on the issue under consideration because the amount of advance licence fees paid during Financial Year 2005-06 was just an advance and it converted into expenditure during Financial Year 2006-07 (Assessment Year 2007-08). Thus Ld. CIT(A) was not justified in confirming the addition made by Ld. A.O. We thus set aside the finding of Ld. CIT(A) and allow the claim of the assessee for the expenditure of licence fees
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