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TMI Blog2012 (10) TMI 215X X X X Extracts X X X X X X X X Extracts X X X X ..... on estimated basis. Without prejudice to the above contention, the CIT (A) ought to have followed the decision of Jurisdictional ITAT Mumbai in the case of Godrej Agrovat Ltd Vs ACIT (2010-TIOL-616-ITAT-Mum) wherein it had been held that the disallowance will be 2% of exempt income. 02. On the facts and circumstances of the case CIT(A) erred in disallowing a sum of Rs. 19,67,140/- as prior period expenses on the ground that evidence that these have accrued or crystallized during the year was not submitted. The CIT(A) ought to have appreciated that in the case of appellant which has branches throughout India and abroad, incurring of expenditure is a continuous process and therefore no amount can be treated as prior period expenses based on decision of Jurisdictional ITAT in the case of Toyo Engg. India Ltd Vs JCIT (100 TTJ 373) and Saurashtra Cement and Chemical Industries Ltd Vs CIT (213 ITR 623 Guj). 03. On the facts and circumstances of the case and in law, the learned CIT (A) erred in disallowing the lease premium expenses of Rs. 1,55,20,622/- on the ground that it is a capital expenditure. The CIT(A) should have noted that the said sum being amortization of premium paid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e proportionate expenditure incurred by the treasury department. The amount relating to tax free income proportionately arrived at based on exempt income to total income amounts to Rs. 8,16,657/-.Therefore,if at all any disallowance is to be made the same cannot exceed Rs. 8,16,657/-. Without prejudice to the above contention, if at all any disallowance is warranted the same cannot exceed 2% of the tax free income. Reliance was placed for this view on the decision of Jurisdictional ITAT Mumbai in the case of Godrej Agrovet Ltd vs. ACIT (2010 TIOL 616 ITAT, Mum) and ITAT Chennai in the case of Bharat Overseas Bank Limited in ITA No. 2622/Mds/2005 for the Assessment Year 2002-03 dated 15.09.2006. 5. The CIT(A), on consideration of the assessee's submissions held that the disallowance made by the AO at 12% of 84.05 crores, is very high, and after referring to the latest decision of Hon'ble Bombay High Court in the case of Godrej & Boyce, held that reasonable disallowance may be made and he, therefore, directed the AO to compute the disallowance at .5% of the average of investment yielding tax free income. 6. The assessee, still not satisfied, is now before the ITAT on this issue. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case of assesses like that of the appellant with branches spread across the country, incurring of expenditure is a continuous process and no part of the expenses can be cut off and treated as prior period expenses. Reliance for this view is placed on the decision of ITAT, Mumbai in the case of Toyo Engineering India Limited Vs JCIT 100 TTJ 373 wherein it was held as under: "Even though a previous year is directly cut off on 31st March of every year, the actual carrying on of business which is a live process, cannot be cut off as exactly, especially in an organization like that of the assessee where activities are carried out through various site offices. Therefore, it is quite natural that there would be an amount of overflow of in formation after the close of the accounting year. Therefore, to certain extent, the claim of the assessee that the details of such expenditure were received only after the close of the accounting year, could be accepted. It is a continuous process to incur expenditure and to account for in the books of account. Therefore, even though they are treated technically as prior period expenses, it relates to a continuous flow of expenditure. Therefore, ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowed." We find that the decision of the Jurisdictional Court in the case of Engg. India Ltd. Vs JCIT 110 TTJ 373 wherein it has been held as follows: "It is quite natural that there would be an amount of overflow of information after the close of the accounting year. Therefore, to certain extent, the claim of the assessee that the details of such expenditure were received only after the close of the accounting r could be accepted. It is a continuous process to incur expenditure and to account for in the books of account. Therefore, even though they are treated technically as prior period expenses, it relates to a continuous flow of expenditure. Therefore, there is no justification in disallowing the expenditure, otherwise normally eligible for deduction." Respectfully following the above, we dismiss the ground raised by the Revenue." Since the issue now is settled on identical grounds by the coordinate Bench, respectfully following the decision in the case of Union Bank of India, as also our own order, where we have deleted the impugned addition, we delete the addition made by the revenue authorities on this issue, in the instant year. We, therefore, set aside the order of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aimed as bad debts, on the ground that the assessee has not actually written off the amount in the books. According to the AO, the bad debt is allowable only if it is irrecoverable and is actually written off in the accounts of the assessee. The AO observed that only prudential write off and not actual write off as irrecoverable cannot be allowed. 31. Aggrieved, the assessee approached the CIT(A), who, relying on the decision of assessee's own case in assessment year 2000-01 by the CIT(A) and also by following the decision of Hon'ble Supreme Court in the case of Vijaya Bank v/s CIT, reported in 323 ITR 166, wherein the Hon'ble Apex Court held, "Though a mere debit to the profit and loss account would constitute a provision for a bad and doubtful debt, yet that would not constitute actual write off. But where besides debiting the profit and loss account and creating a provision for bad and doubtful debt, the assessee has correspondingly/simultaneously obliterated the said provision from its accounts by reducing the corresponding amount from loans and advances/debtors on the assets side of the balance-sheet, and, consequently at the end of the year, the figure in the loans a ..... 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