TMI Blog2019 (3) TMI 807X X X X Extracts X X X X X X X X Extracts X X X X ..... rected that the disallowance so computed shall not exceed the exempt income earned by assessee during year under consideration. Disallowance of prior period expenses - method of accounting followed - Year of assessment - HELD THAT:- For assessment year 2003-04 in assessee’s own case [2015 (1) TMI 739 - ITAT DELHI] has observed that expenses are always claimed by assessee in year in which the same are quantified, while allowing claim of assessee. It is observed that this method of accounting has been accepted by authorities below from assessment year 1991-92 to 2000-01. It is also observed that for assessment year 2000-01 notice under section 263 has been issued by CIT, for examining this issue, and the same has been dropped. Disallowa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the case and in law, the CIT(A) has erred in deleting the disallowance of ₹ 22,47,597/- being expenses related to prior period. 3. On the facts and circumstances of the case and in law, the CIT(A) has erred in deleting the disallowance of ₹ 18,25,000/- being paid to M/s Umang Credit Capital Ltd. Which has not provided services in arranging the loan to the assessee company. 4. The appellant craves leave to add, alter or amend any ground of appeal raised above at the time of hearing. 2. Brief facts of the case are as under: Assess filed its return of income on 31/10/2002, declaring total income of rupees Nil under normal provisions of the Act, after set of brought forward losses and depreciation, totalling ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he other hand Ld.AR placed reliance upon order passed by this Tribunal in ITA No. 410 and 1032/Del/2017 vide order dated 27/11/2009 in assessee s own case for assessment year 2001-02, wherein proportionate disallowance made was deleted. 5. We have heard submissions advanced by both sides in light of records placed before us. 5.1. Assessee placed reliance on assessment order for assessment year 2003-04, wherein no disallowance under section 14 A has been made and order of ITAT for assessment year 2001- 02, wherein disallowance of 1% has been deleted. 5.2. We have perused Annexure C, Schedules 6 to audited accounts, wherein investments made by assessee have been listed. It is observed that assessee has sufficient investments ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹22,47,597/-, being expenses related to prior period. 6.1. Ld.Sr.DR submitted that, these expenses pertain to prior period, and hence are not allowable against income of current year. Placing reliance upon order passed by Ld.AO he submitted that assessee has been using mercantile system of accounting of expenses and liability of the same depends upon time when services are provided, which is in preceding year. 6.2. On the contrary, Ld.AR submitted that, bills in respect of services provided were received during year and therefore expenses related to current year and were allowable. It has been submitted that for similar reason proceedings under section 263 was initiated, for assessment year 2000-01 and Ld.CIT therein upon be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in view taken by Ld. CIT (A) and same is upheld. 6.8. Accordingly this ground raised by revenue stands dismissed. 7. Ground No. 3 has been raised by revenue against deleting of disallowance of commission expense amounting to ₹18,25,000/- paid to M/s.Umang Credit Capital Ltd. 7.1. Ld.Sr.DR submitted that bank had issued notice under section 133 (6) to Export Import Bank, Mumbai Head Office calling for details towards sanction of term loan of ₹ 25 crores to assessee. In response to notice under section 133 (6) Bank informed Ld.AO regarding details as well as confirmed that M/s. Umang Credit Capital Ltd., was not involved in negotiating and/or arranging for loan facilities on behalf of assessee. Ld.Sr.DR submitted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Credit Capital Ltd., for disbursement of loan. We are of view that Ld.CIT (A) failed to examine whether party to whom commission has been paid by assessee during this year is same as that in earlier year, and whether such loan has been taken for purposes of assessee s business. Under such circumstances we do not agree with Ld. CIT(A) as well as Ld.AR that issue stands covered by orders of this Tribunal in earlier years. We accordingly set aside this issue to Ld.AO for due verification in the light of relevant documents on record. Ld. AO is to verify the same as per law to ascertain true nature of transaction. Assessee is directed to file all requisite details as called for by Ld. AO in order to decide this issue. 8.2 . Accordingly thi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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