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Bharat Insulation Company (I) Ltd Versus Asst. Commissioner of Income tax

2015 (10) TMI 1595 - ITAT MUMBAI

Prior period expenditure disallowed - assessee canvassed that though the impugned expenses were incurred during the period January 2002, to March 2002 but the liability therein had crystallized only on execution of the agreement in August 2002 and, therefore, such expense was an allowable deduction in the assessment year 2003-04 - Held that:- Decision of the CIT Vs. Exxon Mobil Lubricants P. Ltd. [2010 (9) TMI 36 - DELHI HIGH COURT ] does not support the case of the Revenue before us, and, rathe .....

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on - Decided in favour of assessee. - ITA No. 1401/Mum/2013 - Dated:- 29-5-2015 - G. S. Pannu, AM And Sanjay Garg, JM,JJ. For the Appellant : Shri Yogesh Kamat For the Respondent : Shri M Subramaniam ORDER Per: G S Pannu, AM The captioned appeal preferred by the assessee is directed against the order of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)']dated 16.01.2013 which in-turn has arisen from an order passed by the Assessing Officer u/s 143(3) of the Inco .....

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y, copper from M/s Hindalco Industries Ltd. The aforesaid amount reflected interest charged by Hindalco Industries Ltd, on account of delayed payment of dues by assessee. The Assessing Officer noted that the interest expenditure related to the period ending on 31.03.2009, which corresponded to immediately preceding assessment year of 2009-10 and, therefore, the said expenditure related to an earlier assessment year. Since the assessee was following the mercantile system of accounting, the Assess .....

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evious year relevant to assessment year under consideration. In support, a reference has been made to pages 8 to 15 of the Paper Book, wherein are placed copies of the debit notes issued by Hindalco Industries Ltd., in terms of which the interest of ₹ 38,98,474/- has been charged from assessee on delayed payment. It has been submitted that the said debit notes are issued on the dates falling within the previous year relevant to the assessment year under consideration and on this basis, the .....

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d expenditure. 5. We have carefully considered the rival submissions. Factually speaking, there is considerable strength in the plea set-up by the assessee that liability in respect of the impugned expenditure of ₹ 38,98,474/- has crystallized only on the receipt of debit notes from Hindalco Industries Ltd, in the current assessment year. No doubt, interest has been charged by Hindalco Industries Ltd, in respect of purchases effected by the assessee in the earlier year, but the liability t .....

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is year in the same manner as in the past years. This aspect has not been contraverted by the Revenue before us. 6. In the aforesaid factual background, we find that the plea of the assessee for deduction of impugned expenditure in the current assessment year is wholly justified and is in line with the ratio of Judgment of Hon'ble Bombay High Court in the case of CIT Vs. Mahanagar Gas Ltd. [2014] 42 taxmann.com 40 (Bombay). 7. We find that the CIT(A) has disagreed with the assessee on the ba .....

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