TMI Blog2013 (1) TMI 823X X X X Extracts X X X X X X X X Extracts X X X X ..... er. However, the prior period expenses claimed in the Profit Loss Account were allowed as such by the Assessing Officer. The learned Commissioner of Income-tax II, Hyderabad, noticing that the Assessing Officer has not examined the adjustment in relation prior period expenses to the extent of ₹ 254.44 lakhs initiated proceedings under Sec.263 and directed the Assessing Officer to recompute the income by disallowing prior period expenses and allowing the same in the year in which they actually accrued. The operative part of that order dated 23.3.2005 is as under- Thus. there is no merit in the contention of the assessee in so far as the allowability of prior period expenses proposed for disallowance u/s. 263 is concerned and accordi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be allowed as per the original direction of the Commissioner of Income-tax under Sec.263. 4. The assessee, thereupon, approached the Assessing Officer under S.154 to examine this issue and pass necessary order, as the order of the Commissioner of Income-tax was not fully implemented and the amount of ₹ 151.37 lakhs was neither allowed in the year under consideration, nor allowed in any other year. 5. However, the Dy. Commissioner of Income-tax 16(1) without examining the issue, on the reason that the assessee s appeal under S.263 was dismissed by the ITAT, rejected the contention of the assessee vide order dated 18.03.2011. This order was challenged before the CIT(A), who in turn, did not find any merit in the assessee s conten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the modification order passed by the ITAT, the issue of prior period expenses are also to be examined in the current year whether the expenses crystallised/accrued. Therefore, it is imperative on the part of the Assessing Officer to examine whether the prior period expenses have crystallised during the year or in any earlier year or other years so as to allow the same, as per the directions on record, with combined reading of the order of the Commissioner of Income-tax passed under S.263 as well as the orders of the ITAT dated 13.7.2007 and 25.4.2008. Since this exercise of examining the crystalistion of expenses has not been undertaken by the Assessing Officer, at any point of time either while giving effect to the order of CIT dt.08.03.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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