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M/s. Chrome Pictures Pvt. Ltd. Versus ACIT, 11 (1) , Mumbai

2015 (11) TMI 10 - ITAT MUMBAI

Addition of prior period expenses - Held that:- the said prior period expenses are not allowable considering the system of accounting followed by the assessee. It is not the case of the assessee that the payability is crystallized during the year under consideration. After considering the facts narrated by the assessee as well as the relevant material placed before us, we are of the opinion, the conclusion drawn by the CIT (A) in this regard is fair and reasonable and it does not call for any in .....

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f the assessment years. It is also noticed that the Revenue did not make disallowance in some years and made disallowance of ₹ 5 laksh in AY 2011-2012 and ₹ 1 lakh in AY 2012-2013. It is also in the year under consideration, AO resorted to disallow 25% of the total claim and made huge addition of ₹ 50.42 lakhs. Considering the above facts, we are of the opinion that such % based ad-hocisam is not acceptable as it is without any basis. In all fairness, in our opinion, making an .....

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eal filed by the assessee against the order of the CIT (A)-3, Mumbai dated 30.5.2012 for the assessment year 2008-2009. In this appeal, assessee raised the following grounds which read as under: "1. On the facts of the case, the Ld AO erred in adding and the Ld CIT (A) in confirming the addition of 25% of expenses of cost of production amounting to ₹ 50,42,186/- incurred in cash terming it as non-genuine. 2. On the facts of the case, the Ld AO erred in adding and learned CIT (A) erred .....

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, Ld DR relied on the orders of the Revenue Authorities. 3. After hearing both the parties, we find para 2.3 of the CIT (A)'s order is relevant in this regard. In the said para, it is discussed that the said prior period expenses are not allowable considering the system of accounting followed by the assessee. It is not the case of the assessee that the payability is crystallized during the year under consideration. After considering the facts narrated by the Ld Counsel for the assessee as we .....

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rative expenses. During the year, assessee incurred cash expenses amounting to ₹ 2,01,68,744/-. During the assessment proceedings, assessee could not furnish the relevant third party vouchers to substantiate its claim of the said expenses. Considering the assessee's failure, AO proceeded to make disallowance applying the flat rate of 25% of the claim and made an addition of ₹ 50,42,186/-. Aggrieved, assessee carried the matter in appeal before the first appellate authority. 5. Du .....

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no.1. 6. During the proceedings before us, on this issue, Ld Counsel for the assessee fairly submitted that the assessee is in this line of business for many years and the disallowance of this magnitude is done only in the year under consideration. Mentioning that certain ad-hoc additions of ₹ 1 lakh and ₹ 1.5 lakhs was made in the AYs 2011-12 and 2012-13 respectively. Further, he mentioned that no disallowance was made in the scrutiny assessment for the AY 2010-2011. Ld Counsel for .....

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