TMI Blog2012 (10) TMI 661X X X X Extracts X X X X X X X X Extracts X X X X ..... and electricity and having been incurred wholly for the purpose of business was allowable as revenue outgo and/or under Section 30 of the Act - treatment in the books of accounts is a pointer as to how the assessee itself treated the outgo for the purpose of its business - none of the authorities below considered the relevant Accounting Standards and nature of business of the assessee while deciding the issue - CIT(Appeals) fell in error in giving allowance to the assessee without verifying such aspects – matter remanded to AO - I.T.A. No. 1650/Mds/2011 - - - Dated:- 2-4-2012 - Abraham P George, Challa Nagendra Prasad, JJ For Appellant : Shri Pramod Kumar, CIT-DR For Respondent : Shri Raja Ganapathi ORDER Per : Abraham P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounts were expenses eligible for charging against income in the succeeding financial year to the extent it was not claimed in the impugned assessment year. As per the assessee, it had not made any further claim in the succeeding year. A.O. from the above submission was of the opinion that it was an admitted position that such expenses were eligible for charging against the income in the succeeding financial year. As per the A.O., such expenditure brought an enduring benefit to the assessee. He, therefore, considered the claim not to be allowable and such claim made through the income computation statement was disallowed. 3. In its appeal before ld. CIT(Appeals), argument of the assessee was that a break-up of the expenditure was submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... software is considered as an asset and expenditure incurred for development of software which was shown as part of work-in-progress ought not have been allowed by ld. CIT(Appeals) as revenue expenditure for tax purposes. In any case, according to learned D.R., ld. CIT(Appeals) relied on a break-up furnished by the assessee for allowing the claim, without getting a report of the Assessing Officer. 5. Per contra, learned A.R. submitted that details of break-up were submitted before the Assessing Officer. However, the Assessing Officer failed to consider such break-up. As per the learned A.R., treatment in the books of accounts was not relevant for the purpose of determining whether a claim of the assessee was allowable in the Act or not. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ks of accounts cannot be a sole determinant for deciding allowability of an amount under the Act. However, in our opinion, treatment in the books of accounts is a pointer as to how the assessee itself treated the outgo for the purpose of its business. Hon ble Apex Court in the case of CIT v Woodward Governor India P.Ltd (312 ITR 254) , in para 21 of its order, has held as under:- 21. In conclusion, we may state that in order to find out if an expenditure is deductible the following have to be taken into account (i) whether the system of accounting followed by the assessee is mercantile system, which brings into debit the expenditure amount for which a legal liability has been incurred before it is actually disbursed and brings into cre ..... X X X X Extracts X X X X X X X X Extracts X X X X
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