TMI Blog2012 (12) TMI 662X X X X Extracts X X X X X X X X Extracts X X X X ..... free of cost, has to set off the work-in progress, from the profits of the relevant year as the assessee is no longer going to earn income out of the said power lines. By debiting the expenditure to profit and loss account and credibility the closing stock, it is clear that the assessee has not claimed this expenditure as deduction in the earlier years. As held by the Hon’ble Courts in CIT Vs. Standard Radiators Pvt. Ltd [2005 (12) TMI 70 - GUJARAT HIGH COURT] wherever there is a change of method of accounting, for genuine reasons, there is every chances of claim of double deduction arising during the year on change of accounting. The necessity and the crystallization of the liability during the relevant period is to be consider for all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ght to have accepted the explanation and allowed the deduction of Rs.13,63,450/- as claimed by the appellant. 4. The ld. CIT(A) ought to have appreciated that the Hon ble Tribunal in the first round has allowed he claim and the High Court has set aside the issue back to the file of the assessing authority only to consider the claim in the right perceptive after considering the accounting policy to be consistently followed by the appellant. 5. The ld.CIT(A) ought to have appreciated that the appellant had rightly claimed the expenditure being the part of the expenditure on infrastructural facilities in providing power lines for which the licence is given by the electrical authorities when facility was handed over. 6. On the facts the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in the accounts and classified as current assets. It was submitted that the Corporation has never written off the expenditure in the accounts with the intention of recovering the amount from Karnataka electricity Board who is the service provider. However, the Corporation was correspondingly recovering from the allottee the cost of the shed which also included the cost of infrastructure facilities credited by the Corporation and the proceedings of such collections was treated as income. It was submitted that in the financial year 1995-96, the Corporation charged the expenditure incurred for the above infrastructure facilities during the year to its profits and loss account without correspondingly considering it as current asset. In view o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the previous year under consideration and not from earlier year period as it chooses. He thus disallowed the claim of prior period of expenditure 13,46,163/- and brought it to tax. 4. The assessee preferred an appeal before the CIT(A) who confirmed the order of the AO and the assessee preferred an appeal before the ITAT which was allowed. 4.1 The Revenue carried the matter in appeal before the Hon ble High Court and the High Court vide order dated 30.11.2006 remitted the matter back to the AO for re-decision and reconsideration of the matter afresh without in any way being influenced by his earlier order or by order of the Hon ble High Court and directed him to pass orders in accordance with law. 4.2 Consequent to the same, the Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d., reported in 299 ITR 1, (SC) every assessee is entitled to change the method accounting unless it results in distortion of profits of the particular year. He also placed reliance upon the decision of the Hon ble Gujarat High Court in the case of CIT Vs. Standard Radiators Pvt. Ltd reported in 286 ITR 207, wherein it was held that where the assessee changes its system of accounting from cash basis to mercantile basis and accordingly, claims deduction of provision for bonus as well as payment of bonus relatable to the earlier year made in the year under consideration, the total deduction was necessary concomitant in the year of change of system of accounting and, therefore, payment could not be said to be relatable to earlier year and disa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e question before them i.e whether expenditure of Rs.13,65,450/- incurred by the assessee over the asset which was debited to the profit and loss account and also credited to closing stock and as working in progress and treated as an asset during the financial year 1994-95 should be treated as Revenue expenditure during the current assessment year 1996-97, when the item was handed over free of cost to the K.E.B , especially when it was reflected in opening stock and omitted in the closing stock. The Revenue authorities have held that expenditure incurred by the assessee on laying of the power lines is Revenue in nature. Having held so, merely because the said expenditure has been debited to the profit and loss account and credited to the cl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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