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The Asst. Commissioner of Income Tax Circle-1 (1) , Visakhapatnam Versus M/s Bharat Heavy Plates And Vessels Ltd.

2018 (1) TMI 601 - ITAT VISAKHAPATNAM

Prior period expenses allowability - Held that:- Prior period expenses are to be allowed as deduction in the year under consideration and accordingly, we dismiss the appeal of the revenue. See Hindustan Shipyard Ltd., Visakhapatnam and others Versus Addl. CIT Range-3, Visakhapatnam and others [2011 (2) TMI 1536 - ITAT VISAKHAPATNAM]. - I.T.A.No.48/VIZ/2016 - Dated:- 10-1-2018 - SHRI V. DURGA RAO, JUDICIAL MEMBER AND SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER For The Appellant : Shri Debakumar Son .....

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e order of the Ld. CIT(A)-1, Visakhapatnam is erroneous on the facts of the case and in law 2. The Ld. CIT(A) erred in deleting the entire addition of ₹ 382.76 lakhs made by the Assessing Officer on account of disallowance of prior period expenses on the ground that the amount in fact represents prior period income and not prior period expenses. 3. The Ld. CIT(A) ought to have upheld the action of the Assessing Officer in disallowing prior period expenses to the extent of ₹ 3 1.39 la .....

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an be claimed as deduction in a succeeding year only on the basis of accrual/crystallization of expenditure during such succeeding year and not otherwise and in the present case, assessee failed to establish that the liability of ₹ 31.39 lakhs, which was adjusted against prior period income of Its. 382.76 lakhs, got crystallized in this year. 6. The appellant craves leave to add or amend or alter or delete any ground at the time of hearing of the appeal. 7. For these and other grounds that .....

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amounting to ₹ 382.76 lakhs as a reduction in the return of income. Since the prior period expenses were not admissible reduction and required to be claimed as reduction in the year in which it was accrued the AO made the disallowance of ₹ 382.76 lakhs and added back to the returned loss of the assessee. Aggrieved by the order of the AO, the assessee went on appeal before the CIT(A) and the Ld.CIT(A) deleted the addition holding that the company itself has taken net credit of ₹ .....

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r period is required to be considered in the year in which it was incurred or accrued. Since the assessee has claimed the earlier year expenditure, the same is not allowable and further argued that the expenditure is not crystallized in the year under consideration. Hence, requested to confirm the addition made by the AO. 4. On the other hand, the Ld.AR submitted that on the same facts in the assessee s own case for the assessment year 2007-08, the Hon ble ITAT, Vizag Bench allowed the appeal of .....

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the order of the Ld.CIT(A) which is made available in para No. 4.3 to 4.3.2 as under : 4.3. I have carefully considered the above submissions. From the details filed, the prior period adjustments are as follows Debit Credit Raw material, Stores etc., consumed - (net of CENVAT unavailed) (net of CENVAT una 31.39 lakhs Employees remuneration 0 . 9 0 Other expenses 35.49 Interest 246.7 Total 31.39 lakhs 382.76 lakhs 4.3.1. Thus from the above it can be seen that there is net income out of the prior .....

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s as a whole and not to make a pick and choose. The relevant portion of the Hon'ble ITAT's order dtd.10.022011 is reproduced hereunder Having heard the rival submissions and from a careful perusal of the orders of the authorities below, we find that the assessee has offered the prior period income along with the expenditure during the impugned assessment year. The Assessing Officer has accepted the prior period income in this year but disallowed the prior period expenditure. This action .....

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