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TMI Blog2015 (7) TMI 993X X X X Extracts X X X X X X X X Extracts X X X X ..... nvenience. In the appeal filed by the assessee for the assessment year 2007-08, following ground was urged before us: Appellant submits that the Commissioner of Income Tax (Appeals) is not justified in confirming the action of assessing officer partially, in disallowing following amounts out of various items included under 'Prior Period Expenses'. 1 Interest on Government of India loans Rs.3,775.50 lakhs 2 Government Guarantee fee Rs.3,699.17 lakhs 3 Arbitration Award Rs.207.50 lakhs 4 Interest Rs.8.94 lakhs 5 Pay & Benefits Rs.69.39 lakhs 6 Taxes Rs.8.21 lakhs 7 Repairs & Maintenance Rs.7.16 lakhs 8 Power & Fuel Rs.3.01 lakhs 9 Depreciation Rs.0.05 lakhs 10 Others Rs.49.54 lakhs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be noticed that the assessee having not specifically mentioned that the prior period income was also impliedly offered to tax, by virtue of the method followed by it, the assessing officer had no occasion to consider the taxability of prior period income. He merely observed that there is no provision in the Act for claiming prior period expenditure in the subsequent years and accordingly he disallowed the claim of the assessee. Ld. CIT(A) accepted the view of the assessing officer and in this regard observed that only net prior period expenditure was offered to tax because the total expenditure minus the prior period income offered to tax was shown as expenditure. He also observed that waiver of GOI loans, interest and guarantee fees are i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nment for concession in levy of tax upto 31.03.1999. This request was rejected by the Government. However, with the intervention of Minister of State for Shipping, the assessee company submitted a proposal for payment of Rs. 5 crores as full and final settlement i.e. a one time settlement. This proposal is pending with the A.P. Government. Assessee did not debit this liability in the books in the earlier years. When it was pointed out in the Government audit, the same was provided in the books. The case of the assessee is sales tax liability is covered by the provisions of section 43B of the Act and therefore disallowance of Rs. 4.32 crores was made while computing the income as per the I.T. Act in which event further disallowance would res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e prior period income, it amounts to adopting a pick and choose method of accepting the prior period income while disallowing prior period expenditure. We therefore direct the assessing officer to reconsider the claim of the assessee with regard to the prior period income; needless to observe that if the amounts shown as prior period income are not crystalised during this year or it specifically pertains to the earlier years, it cannot be brought to tax. A.O. is directed accordingly. With these observations, the appeal filed by the assessee is treated as partly allowed for the assessment year 2007-08. 6. In the departmental appeal, the main ground of the revenue is that the Ld. CIT(A) erred in deleting the addition made on account of demur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bills submitted by various agencies are not certified by various departments in the assessee company, due to delay in verification of various work orders, quality check, etc. Assessee's contention is that it got crystalised only during the previous year relevant to the assessment year under consideration. In this regard, the Ld. CIT(A) observed as under:- "It is but natural that some of the approvals/finalisation etc get delayed and spill over to the next year. The said expenditure, thus, can be said to be crystalised during the year under consideration. The decisions cited by the assessee are applicable to these expenses as it is beyond the control of the assessee to claim these expenditures in the year of billing. Assessee also admitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period expenditure was shown in the annual reports and only the net figure was taken into consideration in the books of account; if the prior period expenditure is disallowed on the ground that it does not pertain to this year, the assessing officer cannot blow hot and cold and accept the prior period income as pertaining to this year. In short his contention is that even prior period income should be excluded if it is not crystalised in this year. Similar issue was considered by us in the appeal for the assessment year 2007-08. For the reasons given therein, we uphold the order of the CIT(A) with regard to prior period expenses but direct the assessing officer to consider the plea of the assessee with regard to the prior period income. In ..... X X X X Extracts X X X X X X X X Extracts X X X X
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