TMI Blog2018 (1) TMI 781X X X X Extracts X X X X X X X X Extracts X X X X ..... penditure which is crystallized during the previous years relevent to assessment year under consideration should be allowed as deduction, different principle govern taxing prior income. Therefore, deducting prior period income From prior period expenditure is against well settled principles of law. Therefore, we remand this issue back to the file of the AO with a direction that after examining evidence filed before the CIT(A) to allow prior period expenditure, if liability of expenditure had occurred/crystallised during the previous year relevant to year under consideration and also to tax prior period income. Keeping in view the salutary principle of law income of the year alone should be taxed. - ITA No. 274/Bang/2014, ITA No. 1490/Bang/2015, ITA No. 212/Bang/2014 And ITA No. 1596/Bang/2013 - - - Dated:- 13-12-2017 - Shri Sunil Kumar Yadav, Judicial Member And Shri Inturi Rama Rao, Accountant Member For The Assessee : Shri V. Srinivasan, Advocate For The Revenue : Shri G. R. Reddy, CIT(DR) ORDER Per BENCH : These are cross appeals filed by the assessee as well as the revenue directed against the orders of the Commissioner of Incometax( Appeals)-1, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penditure of ₹ 98,29,639/- while working out the quantum of deduction u/s.801A(4)(iv) of the Act, under the facts and in the circumstances of the appellant's case. 3) Without prejudice to the right to seek waiver with the Hon'ble CCT/DG, the appellant denies itself liable to be charged to interest u/s. 234-B and, 234C of the Act, which under the facts and in the circumstances of the appellant's case and the levy deserves to be cancelled. 4) For the above and other grounds that may be urged at the time of hearing of the appeal, your appellant humbly prays that the appeal may be allowed and Justice rendered and the appellant may be awarded costs in prosecuting the appeal and also order for the refund of the institution fees as part of the costs. 5. The grounds of appeal No.1 and 4 are general in nature and do not require any adjudication. 6. Ground No.2 challenges the direction of the CIT(A) confirming allocation of indirect expenditure to the unit of power generation for the purpose of computing deduction u/s 80IA(4)(iv) of the Act. The learned counsel for the assessee vehemently contended that the Legislature has employed the word derived from . On pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 004 and September 10, 2004, respectively on this issue, that the corporate expenditure essentially incurred for the Silvasa unit has to be taken into account for the purpose of allowing the benefit under the aforesaid section. Both the judgments aforesaid were rendered on identical points. These judgments have even accepted by the assessee. We, therefore, quote the relevant portion of the said earlier judgment and order of the learned Tribunal : We have considered the rival contentions and carefully perused the orders of the authorities below, and deliberated on the case law referred to by both the lower authorities as well as cited at the Bar by the learned authorised representative and the Departmental representative. As per the provisions of section 80-IA, deduction is to be allowed on the profit of an undertaking referred to in subsection (iv) of section 80-IA. Thus, the intention of the Legislature is to give deduction in respect of the profits and gains from the industrial undertaking or enterprise engaged in infrastructure development, etc. For arriving at the correct profit of the industrial undertaking, the expenditure related to such undertaking is to be properly a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO, the revenue is in appeal (ITA No.212/Bang/2010) raising the following grounds of appeal: 1) The order of the Learned CIT(Appeals) is opposed to law and the facts and circumstances of the case. 2) The C1T(A) erred in restricting the disallowance of unallocated expenditure of ₹ 98,29,636/- against the disallowance of ₹ 1,18,38,912/- allowing a relief of ₹ 30,09,273/- on allocation of expenditure towards power generation segment without giving any reasons as to how the unallocated expenditure proportionate to the turnover is worked out by him as ₹ 98,29,636/-. 3) The C1T(A) erred in restricting the disallowance of prior period expenditure of ₹ 8,06,831/- against ₹ 27,00,046/- made by the AO thus giving a relief of ₹ 18,93,215/- subject to verification of interest component u/s 244A without appreciating that the assessee is following the mercantile system of accounting and the assessee has not been able to prove the liability has crystallized during the year. 4) For these and such other grounds that may be urged at the time of hearing, it is humbly prayed that the order of the C1T(A) be reversed and that of the Assessi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l filed by the assessee is dismissed. 16. The revenue raised the following grounds of appeal in ITA No.1596/Bang/2013 for assessment year 2010-11: 1. The order the Learned CIT (Appeals is opposed to law and the facts and circumstances of the case. 2. The CIT(A) erred in not appreciating the fact that the assessee itself had submitted vide its letter dated 19-10-2012 that prior expenditure pertaining to provisions of income tax, FBT and income tax refund of ₹ 6,34,781 are to be added back to the income of the assessee and also that the assessee did not give any explanation for the claim of balance amount of ₹ 7,00,684 as to whether the same crystallized during the year under consideration or not. 3. For these and such other grounds that may be urged at the time of hearing, it is humbly prayed that the order of the CIT(A) be reversed and that of the Assessing Officer be restored. 4. The appellant craves to add, to alter, to amend or delete any of the grounds that may be urged at the time of hearing of the appeal. 17. The AO made addition of ₹ 12,97,843/- on account of prior period expenditure. On appeal before the CIT(A), the CIT(A) after consideri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... astructure Ltd. v. Addl. CIT [Mum-Trib): (2011) 060 DTR 0419: (2011) 009 ITR (Trib) 0084. 3. The learned CIT (A) is not jsutified in upholding the aforesaid allocation without considering all the submissions made by the Appellant and pass a non-speaking order just by referring to the previous year's assessment. 4. An apportunity of personal hearing may be granted to the appellant. 5. For the above and other grounds that may be urged at the time of hearing of the appeal, your Appellant humbly prays that the appeal may be allowed and justice renderred and the Appellant may be awarded costs in prosecuting the appeal and also order for the refund of the institution fees as part of costs. 20. The grounds of appeal Nos. 1,3,4,5 6 are general in nature and do not require any adjudication. Ground No. 2 challenges the finding of the CIT (A) confirming allocation of common expenditure to eligible unit u/s 80IA. This issue was decided against the assessee in ITA No. 274/Bang/2014 for assessment year 2009-10 wherein we have upheld allocation of common expenditure by application of turnover key. For the parity of reasons, we dismiss these groundsw of appeal. 21. In the resu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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