TMI Blog2014 (9) TMI 361X X X X Extracts X X X X X X X X Extracts X X X X ..... holly or exclusively for purpose of earning of income – AO has not dealt with and examined the aspect but made the addition - even if addition is made in the year, the expenditure will have to be allowed as a deduction in the subsequent years - The income declared in the revised return filed on 30.11.2006 was income and in the revised return loss was declared - The tax effect and the tax involvement would be minimum, and in case we take a holistic view by taking future years in question, there possibly would not be any tax collection shortfall – Decided against revenue. - ITA No. 453/2014 - - - Dated:- 25-8-2014 - Sanjiv Khanna And V. Kameswar Rao,JJ. For the Appellant : Mr. Sanjeev Sabharwal, Sr. Standing Counsel For the Respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scope and ambit of their business to provide venture capital advisory services to Gaja Capital India Fund and to act as a sub-advisory of Gaja Advisors Ltd., Mauritius. Copy of the invoices raised by the assessee were enclosed. It was stated that the income from the agreement was continuous in nature and expenses were written off by the assessee in the next year i.e. Assessment Year 2007-08. The aforesaid expenses were accordingly added back in the income on account of the prior period expenses in assessment year 2007-08. Copy of the financial statement of the assessee and the income tax return of the year 2007-08 were enclosed. The Assessing Officer held that the assessee had changed the method of accounting as earlier, the expenses incur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that when the respondent-assessee had followed the same method in future, there was no question of disallowance. 6. The Tribunal, in the impugned order has referred to the factual matrix and agreed with the findings and ratio of the Commissioner of Income Tax (Appeals). 7. Method of accounting is one aspect and regardless of the treatment given in the books of accounts, the expenditure, if it is revenue in nature, can be claimed under Section 37 of the Act [see Kedarnath Jute Mfg. Co. V/s Commissioner of Income-Tax, (1971) 82 ITR 363 (SC)]. The core and important aspect which should have been determined by the Assessing Officer was; whether or not, the expenditure was revenue or capital in nature. This aspect was missed and not adve ..... X X X X Extracts X X X X X X X X Extracts X X X X
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