TMI Blog2010 (11) TMI 675X X X X Extracts X X X X X X X X Extracts X X X X ..... s the claim of the assessee was vague because the assessee mentioned that these expenditure were either crystallized/settled during the year or were allowable on cash basis as per Section 43B of the Income Tax Act - Appeal is allowed by way of remand to AO Regarding purchase of power - this issue is covered in favour of the assessee by the decision of the ITAT in assessee's own case for A.Y.2003-2004 (supra) - The mere fact that the assessee has disputed the bill amount does not empower the Assessing Office to disallow the claim in full. The dispute is in respect of quantum only and not in respect of actual use of Electricity for business purposes of the assessee - Decided in favour of the assessee - ITA No. 1729/Ahd/2007, ITA No. 2800/Ahd/2008, ITA No. 1829/Ahd/2007, ITA No. 2973/Ahd/2008 - - - Dated:- 26-11-2010 - G.D. Agarwal, Mukul Kumar Shrawat, JJ. Shyam Kumar for the Appellant S.N. Soparkar and Pankaj Shah for the Respondent ORDER G.D. Agarwal: These are cross appeals by the Revenue and the assessee as against the orders of the Commissioner of Income Tax (Appeals), Gandhinagar arising out of the orders of the Assessing Officer passed under S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the original return and in its place substitutes a return which partakes the character of the original return. Since the original return is substituted by the revised return, only the revised return can be considered to be filed as required under section 139(1) of the Act. Hon'ble Gujarat High Court in the case of Arun Textile Co. (supra) held that once a revised return is filed under section 139(5) the original return is substituted by the revised return. It was also held that though the assessee has claimed depreciation allowance in the original return filed but withdrawn the claim in the revised return furnished, the effect is that the assessee has not claimed depreciation allowance by making the intention clear. Therefore, it was not upon to the Assessing Officer to advert to the original return for the purpose of allowing depreciation which can be expressly withdrawn by filing the revised return. This view has been approved by Hon'ble Supreme Court in the case of CIT vs. Mahendra Mills, 243 ITR 56. Hon'ble Supreme Court held that if the revised return is valid return and the assessee has withdrawn the claim of depreciation it cannot be granted relying on the original return a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ide ITA No.2753/Ahd/2006 dated 19-6-2009. Since the facts of the year under consideration are identical, we respectfully following the above decision in assessee's own case for A.Y.2002-2003 and 2004-2004, uphold the order of the CIT(A) on this point and allow ground no.1 of the assessee. 4. Ground No.2 of the assessee's appeal reads as under: "2. The ld. CIT(A) erred in confirming disallowance of Rs.6,00,000/- following his appellate order in assessment year 2002- 03 as expenses attributable to earning exempt income u/s.14A even though no dividend was received during the year and even though there was no nexus established by learned AO between borrowed funds of the appellant and the investment made." 5. At the time of hearing before us, the learned counsel fairly admitted that on this point the ITAT set aside the matter back to the file of the AO in A.Y.2002-03 and 2003-04. He therefore submitted that for this year also the matter may be sent back to the file of the AO. The learned DR, on the other hand, relied upon the orders of the authorities below. 6. We have considered rival arguments of both the sides and we find that the ITAT has considered identical issue i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... zed during the year under consideration and then only the expenditure can be allowed. He therefore submitted that the order of this CIT(A) on this point may be reversed and that of the AO may be restored. 11. We have carefully considered the rival submissions and considered the material available on record. The AO has discussed this issue as under: (4) PRIOR PERIOD EXPENSES: 4.1 A close scrutiny of the tax audit reflects that certain expenses/income pertaining to prior period were made part of the Profit and Loss Account of the period under consideration. The details of such items as per col. No.22(b) of Tax Audit Report u s 44AB are as under: i) Debit entries to P and L A/c Rs.36.56 lacs ii) Credit entries to P and L Rs.3.72 lacs Net debit effect to P Rs.324S lacs Since the assessee is following mercantile system of accounting, they were asked to explain reasons and justification of debiting the P and L A/c of current year with the expenditure pertaining to earlier years as mentioned in the Tax Audit Report. The assessee's reply submitted vide letter dated 1/11/06 is reproduced as under: "As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee was vague because the assessee mentioned that these expenditure were either crystallized/settled during the year or were allowable on cash basis as per Section 43B of the Income Tax Act. However, the AO has not made any comment in respect of the details furnished by the assessee. The CIT(A) has also not considered the details furnished by the assessee, but simply stated that on the basis of the details furnished before the AO, most of the expenditure out of Rs.19,24,046/- were crystallized during the year under consideration. In our opinion, the matter needs proper examination at the end of the AO. We therefore set aside the order of the authorities below on this issue and restore the matter back to the file of the AO. We direct the AO to allow adequate opportunities to the assessee to produce the evidences so as to establish that the liability in respect of prior period expenditure was crystallized during the year under consideration or the expenditure is covered by Section 43B. On furnishing of the details by the assessee, the AO will pass a speaking order in respect of each expenditure, in accordance with law. 12. Ground No.4 of the assessee's appeal reads as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd No.5 of the assessee's appeal is against charging of interest under Section 234B. At the time of hearing before us, the learned counsel fairly conceded that this issue would be consequential. Therefore, we direct the AO to re-compute the interest under Section 234B in accordance with law after the final determination of the income as our above order. ITA No. 2800/Ahd/2008 for A.Y.2005-2006 (Revenue's appeal) ITA No. 2973/Ahd/2008 for A.Y.2005-2006 (Assessee's appeal) 15. Ground No.1 of the assessee's appeal is identical to the Ground No.1 of the assessee's s appeal for A.Y.2004-2005. For the detailed discussion above, in para-3, Ground No.1 of this appeal of the assessee is allowed. 16. Ground no.2 of this assessee's appeal is identical to the Ground No.2 of the assessee's appeal for the A.Y.2004-2005. For the detailed discussion in para-5 the order of the authorities below on this point is set aside and the issue is restored to the file of the AO to be adjudicated in accordance with law. Needless to mention that while re-adjudicating the issue, the AO will allow adequate opportunity of being heard to the assessee. 17. Ground No.3 of the assessee's appeal and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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