TMI Blog2016 (3) TMI 916X X X X Extracts X X X X X X X X Extracts X X X X ..... particulars of income. CIT(A) has rightly deleted the impugned penalty arising from disallowance from prior period expenditure. - Decided in favour of assessee Section 35D disallowance - Held that:- It is to be seen that this amount has arisen because of giving consequential effect to appeals and revisions in assessee’s own case in the preceding assessment years. The same relate to preliminary and preoperative expenditure written off. The initial claim was for ₹ 1,11,62,284/-. The Assessing Officer took clue from appeal orders and revisions for re-computing the same to be of ₹ 14,00,936/- after allowing expense of ₹ 97,61,348/-. We hold in these facts that the assessee’s books raised the impugned claim in tune with that made in the earlier assessment years. We are of the view that such a course of action cannot be held to be an act of furnishing of inaccurate particulars of income.- Decided in favour of assessee Excess remuneration paid to assessee’s Managing Director - Held that:- The assessee had claimed total remuneration of ₹ 68,23,940/- pending approval from the Govt. of India. The relevant particulars pertaining to the relevant post facto approv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (A) has deleted the same in lower appellate orders under challenge. 3. Both the ld. representatives are in unison that facts relevant to the impugned penalties in assessment year 1998-99 are similar to the corresponding grounds raised in the succeeding three assessment years. No distinction on facts is pointed out. We treat ITA 2668/Ahd/2011 as the lead case. The relevant facts are set out as under. We have heard rival contentions. The ld. representatives reiterate their respective pleadings for and against the impugned penal action. 4. The assessee-company manufactures IV fluids and syringes. The Assessing Officer completed reassessment in its case on 28-02- 2005 disallowing prior period expenditure adjustment of ₹ 1,20,32,904/-, section 35D deduction of ₹ 14,00,936/- and excess remuneration to assessee s Managing Director amounting to a sum of ₹ 15,06,940/-; respectively. There is no dispute that these quantum additions have attained finality. The Assessing Officer initiated the impugned penalty proceedings u/s. 271(1)(c) of the Act alleging furnishing of inaccurate particulars of income and its concealment. 5. We come to the impugned penalty proceed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have added back gross prior period expenses of ₹ 16,34,10,285/- in the computation of income instead of prior period expenses of ₹ 15,13,07,385/- and in the process it had claimed excess expenses of ₹ 1,20,32,904/-. This sum was added to the income of the assessee in the assessment order and subsequently penalty was also imposed on this sum of ₹ 1,20,32,904/-. I have considered the facts very carefully and sincerely feel that the facts are not correctly appreciated by the A.O. It is a fact that the assessee had debited a net prior period expenses of ₹ 15,13,07,385/-in the P L a/c. and added the same back in the computation of income. If the AO's reasoning is accepted that the gross prior period expenses of ₹ 16,34,10,289/- needs to be added back in the computation. The natural fall back of this exercise will be that gross prior period expenses of ₹ 16,34,10,289/- should be debited in the P L a/c. and credit receipts of ₹ 1,20,32,904/- should go in the credit side of the P L a/c. This credit of ₹ 1,20,32,904/- is set off by the fact that the assessee has added Net prior period expenses of ₹ 15,13,77,385/- in the compu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der major heads of C F, misc. expenditure, outward freight and travelling etc. Its ledger accounts reveals that the same have been recognized on various dates from 01-04-2005 to 31-03-2006. There is hardly any dispute on genuineness aspect of the above stated expenditure heads. This is not the Revenue s case that the same is capital expenditure otherwise not allowable u/s. 37 of the Act. Both the lower authorities nowhere rebut assessee s case that it has been following past practice or the issue stands decided in its favour in earlier assessment years. Case law (1958) 33 ITR 681 (Bom) CIT vs. Nagri Mills Co. Ltd holds that when an assessee company is assessed at uniform rate, year of raising an expenditure claim is of no consequence, more particularly, when the same is allowable. Next judgment (2010) 194 TAXMANN 158 (Del) CIT vs. Jagatjit Industries accepts consistent accounting practice claiming identical expenditure in mercantile system of accounting wherein the necessary expenditure vouchers have been received after 31st March of the relevant accounting period. Case law (2014) 221 TAXMANN 80 (Bom) CIT vs. Mahanagar Gas Ltd supports assessee s case that prior period expenditur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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