TMI Blog2014 (7) TMI 125X X X X Extracts X X X X X X X X Extracts X X X X ..... expenditure was a permissible deduction and accordingly deleted the addition made by the AO – thus, bond issue expenses will be allowable as deduction as revenue expenditure – Decided against Revenue. Prior paid expenses – Held that:- If the AO is of the view that the expenses are pertaining to the prior period, it is required to be considered for the prior and allowed in that year - If it is found that the expenses are allowable in this year on the basis of crystallization of liability, it may be considered in the year – the assessee is directed to place necessary evidence in support of claim of expenses – the AO is directed to determine the allowability of the expenses - the matter is remitted back to the AO. - ITA No. 5860/DEL/2012 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /- made by Assessing Officer on account of disallowance of prior period expenses. 6. On the facts and the circumstances of the case and in law, the Ld. CIT (A) has erred in deleting the addition of ₹ 1,70,66,694/- made by Assessing Officer on account of disallowance of depreciation on foreign currency fluctuation capitalized. 7. The appellant craves leave to add, to alter, amend or vary from the above grounds of appeal at or before the time of hearing. 2. At the outset, the Ld. AR submitted that appeal filed by Revenue is partly covered in favour of assessee vide earlier order of Tribunal for the assessment year 1997-98 to 2000-2001, 2003-04, 2005-06. He highlighted our attention to a chart filed earlier wherein ground wise o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that during assessment year 2002-03 the COD permission was not given to Department for filing appeal on these grounds and, therefore, submitted that these two grounds are duly covered in favour of assessee. 5. As regards ground no.6, the Ld. AR submitted that Ld. CIT (A) had deleted this addition as he held that it did not belong to the year under consideration on the basis that foreign currency fluctuation loss was capitalized in the assessment year 2001-02 and depreciation was being claimed by assessee on this capitalized amount. He further submitted that assessee could have claimed the whole amount of loss on account of foreign exchange fluctuation in view of various decisions in favour of assessee and supported his case with the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is 14.97%. The total for 30 years of depreciation is ₹ 126,256.42 lacs and Finance income is ₹ 157,820.46 lacs. Total of capital recovery is ₹ 126,256.37 lakhs and total of Lease Equalization is NIL. Since, in the present case also, as per this chart, even after deduction of finance income 14.97% pa., the full value of the cost of assets i.e., ₹ 162,256.37 lacs is fully recovered in lease period of 30 years and hence, it is a case of Finance Lease as per the guidelines issued by ICAI. In the light of various judicial pronouncements cited by Ld. AR of the assessee, we find no reason for not accepting the basis as suggested by ICAI in these guidelines for deciding the character of lease in the present case as finance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... venue supported the orders of the authorities below: We have heard the submissions of both the parties and persued the material available on record and have gone through the orders of the authorities below and the judgment cited by Ld. AR of the assessee. We find that in the case of M/s Khirani Chemicals Ltd. (Supra), the issue before Hon ble Delhi High Court was regarding expenses incurred on issue of debentures. In that case also, the assessee claimed deduction of the entire expenses in the year of issue of debenture whereas the Assessing Officer came to the conclusion that the expenditure would qualify only for amortization u/s 35D of the IT Act. Under these facts, it was held by Hon ble Delhi High Court that the Tribunal was perfectl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore, respectfully following the above Tribunal s order, we direct the Assessing Officer to determine the allowability of the expenses in either of the years and allow accordingly in the year to which it pertains. The Assessing Officer should adopt the same basis as was adopted by him in the earlier year. 11. As regards ground no.2, regarding deletion of ₹ 1,94,652/- made by Assessing Officer to book profits on account of provisions of gratuity, we find that the issue is squarely covered in favour of assessee as gratuity is not merely a provision but it is an ascertained liability. The various case laws relied upon by Ld. AR also supports the case of assessee. Therefore, ground no.2 is also dismissed. 12. As regards ground no. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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