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TMI Blog2015 (7) TMI 320X X X X Extracts X X X X X X X X Extracts X X X X ..... . 3,16,584/- on account of non-accounting of receivable warehousing charges on accrued basis, without appreciating the fact that the assessee was following mercantile system of accounting. 2. The Ld.CIT(A) has erred in law and on facts in deleting the addition of Rs. 21,19,856/- on account of prior period expenses, without appreciating the fact that the prior period expenses claimed in the balance sheet during the year is not permissible. 3. On the facts and in the circumstances of the case, the Ld.CIT(A) ought to have upheld the order of the Assessing Officer. 4. It is, therefore, prayed that the order of the Ld.CIT(A) may be set aside and that of the Assessing Officer may be restored to the above extent. 2. Briefly stated facts ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e addition. 4. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities below. We find that the ld.CIT(A) has decided the issue in para-3.2 by observing as under:- "3.2. I have considered the submissions of the A.R. carefully. On going through the appellate order from Honourable ITAT Ahmedabad in A.Y. 2003-04 and the order passed by my predecessor in office in respect of A.Y. 2004-05 it is seen that the appellant did not receive the increase in storage rent ultimately and the godowns were vacated by the Post Master General subsequently on 31-10-2005. It was an increase made unilaterally by the appellant which was not accepted by the tenant. The increase in rent became dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amp Depot. Therefore, the assessee filed a Civil Suit for recovery of the revised warehousing charges. Thus, the revised warehouse charges will be receivable by the assessee only when this dispute is settled between the assessee and Circle Stamp Depot as because the claim made by the assessee was not accepted by the Circle Stamp Depot. The Ld. Departmental Representative brought no material before us to show that the claim made by the assessee for the revised warehousing charges was accepted at any point of time during the year under consideration by Circle Stamp Depot. In absence of such a material, the lower authorities were not justified in assuming that assessee got right to receive the remaining amount of Rs. 3,86,412/- during the year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmitted that the ld.CIT(A) deleted the addition without appreciating the fact that the prior period expenses claimed in the balance-sheet during the year is not permissible. 5.1. On the contrary, ld.counsel for the assessee supported the order of the ld.CIT(A). 6. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities below. We find that the issue is decided by the ld.CIT(A) in para-4.2 of his order by observing as under:- "4.2. I have considered the submissions of the A.R.carefully. I find the explanation of the A.R. convincing. On going through the explanation reproduced in the assessment order and the supporting documents submitted during the course of hearing I fou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee being exempt in the earlier years, the claim would not have been allowable OUR DECISION:- The items of payment falling U/s 43(B) of the Act shall be allowed to be claimed strictly as per the provisions stipulated in that section and not otherwise. REASONING OF AO 2. The claim of the assessee that the original bills not received is not tenable because the expenses are to be accounted for on due basis under the mercantile system of accounting. OUR DECISION:- The Ld.AO is absolutely correct in stating so, since in mercantile system of accounting, the expense will crystallize on the date of raising of the bill as per the agreed terms and not on the date of the receipt of bills. REASONING OF AO 3. The assessee was requeste ..... X X X X Extracts X X X X X X X X Extracts X X X X
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