TMI Blog2017 (11) TMI 1051X X X X Extracts X X X X X X X X Extracts X X X X ..... AO has to examine the nature and genuineness of the expenditure and decide the issue in accordance with law following the ratio CIT vs. Jagatjit Industries Limited [2010 (9) TMI 58 - DELHI HIGH COURT]. To that extent, the revenue’s appeal is treated as allowed. - I.T.A. No. 865/Mds/2017 - - - Dated:- 5-9-2017 - SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER For The Appellant : Shri. Sreenivasan, JCIT For The Respondent : None ORDER PER S. JAYARAMAN, ACCOUNTANT MEMBER: The Revenue filed this appeal against the order of the Commissioner of Income Tax (Appeals)-1, Chennai in ITA No. 391/CIT(A)- 1/2015-16 dated 31.01.2017. 2. M/s. Dr. Agarwal s Eye Hospital Ltd., the assessee, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear for the purpose of computing the profits and gains of a particular financial year. 3. The DR relying on the decision of Supreme Court in the case of CIT vs. Kalinga Tubes Ltd., 218 ITR 164 (SC), the decision of Kerala High Court in CIT vs. St. George Motors, 161 ITR 444 (Kerala) and the Punjab and Haryana High Court decision in the case of Cebon India Ltd., vs. CIT, 387 ITR 502 (P H) assailed the order of the CIT(A). None appeared from the assessee s side. 4. We heard the DR s submissions and gone through the orders of the lower authorities. In all the cases, where the DR was relying, the respective assessee s were following mercantile system of accounting. They have not provided the Central Sales Tax or the tax payable under t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and loss accounts of those years as assessee was entitled to certain rebate on such interest on fulfilling its export obligations, could not be said to have been crystallized in relevant assessment year when IFCI refused to grant any rebate for non-fulfilment of export obligations by assessee. In the assessee s case, the impugned liability is neither arising by virtue of any statue not it is an interest liability. Hence, on the facts and circumstances of this case, the ratios relied on by the DR are not applicable. In this case, the issues involved are (i) whether the accounting practices had been consistently followed by the assessee and (ii) whether the nature and genuineness of the expenditure is examined. Let us examine them as under: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. (i), supra, is in favour of the assessee. Now, let us examine whether the nature and genuineness of the expenditure has been examined or not. In this regard, the relevant portion of the assessment order is extracted as under: 4. The assessee filed a reply dated 12.10.2015, in this regard which is reproduced as follows: The disallowances mentioned in your order relates to prior period expenditure (expenditure pertaining to previous assessment year claimed during ay 2010-11). The assessee runs chain of ophthalmology hospitals and has over 25 branches across India. On account of the volume of transactions, certain bills could be accounted only after the year end. Though the assessee is a company and require to maintain books ..... X X X X Extracts X X X X X X X X Extracts X X X X
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