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TMI Blog2014 (1) TMI 1881X X X X Extracts X X X X X X X X Extracts X X X X ..... inst claim of deferred revenue expenditure made by the assessee without appreciating the fact that the assessee has treated the said expenses as capital in nature and thereby treated them as part of fixed assets and an expense made for an asset is capital in nature for the financial statements can be treated as revenue expenditure is out of question for purpose of Income-tax Act, 1961. 2. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the disallowance of Rs. 1,41,13,522/- towards input Service Tax, by flailing to appreciate that the assessee while claiming the said expense has created corresponding current asset in the Balance Sheet, which prohibits the assessee from claiming the same as Revenue e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s also. 3 2 3 It also drew attention to the copy of the depreciation schedule as per the Audited Accounts: as well as the depreciation schedule prepared as per Tax Audit Report to drive home the point that although a sum of 22,52,684/- has been amortized by the appellant company by way of debit to the Profit & Loss Account but the same was added back to the computation of income and claimed in entirety. u/s 37(1). of the I.T. Act, 1961. The appellant also relied on the recent decision of Hon'ble Bombay High Court in the case of CIT vs Geoffrey Manners & Co. Ltd reported in 315 ITR 134. 3.3. I have perused the assessment order and written submissions of the appellant The appellant is in the business of sky teleshopping and so it is nat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Assessing Officer in treating the expenditure as capital is reversed. The addition made is, therefore, deleted".. 5. The CIT(A), therefore, deleted the addition made by the AO. 6. Against this order, the department is in appeal before the ITAT. 7. Before us, the DR placed reliance on the observations made by the AO and submitted that the order of the CIT(A) was erroneous. 8. The AR on the other hand submitted that the CIT(A) had taken an appropriate view. 9. We heard the rival arguments and perused the orders of the revenue authorities, the issue pertains to capitalization of such revenue expenditure in the balance sheet and its consequent amortization over a period. The claim of the same as revenue expenditure u/s 37(1), wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... On perusal of the order of the revenue authorities, we have observed, that the department has not proposed to such a disallowance in earlier years. Bearing in mind the consistency of approach on identical facts, we are of the considered opinion that the decision of the CIT(A) does not deserve to be interfered with. 13. Ground no. 1 as raised by the department is therefore, rejected. 14. Ground no. 2 pertains to disallowance of service tax of Rs. 1,41,13,522/-. 15. Dealing with the issue, the AO observed, "The assessee was required to submit details pertaining to the claim of service tax by the assessee in the computation of income. From the perusal 'of the ledger summary, submitted by the assessee it is seen that the said claim is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... justment for the same with the output service tax liability of the company. Therefore, by no means such amount can be treated as receivable and therefore, of capital nature instead of revenue nature and be disallowed on that ground. III. The AR further submitted that since all such input service tax cost aggregating to 1,41,13,532/- has been incurred by the assessee company during the relevant year only and therefore, is required to be claimed as an expenditure in the same year only Accordingly such expenditure although by mistake not debited to the P&L Account has been validly claimed in the return of income for the year. IV It was also submitted that even as per the provisions of section 145A of the act the cost of goods for the pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee held, I have perused the assessment order and written submissions of the appellant Based on detailed explanation given by the appellant in preceding para, it is held that the disallowance of Rs. 1,41,l3,532/- on account of input service tax incurred by the assessee in the relevant year is of revenue in nature and hence allowable as it is not adjustable against any liability of the assessee or refundable by the Service Tax Department. The appellant company rectified the mistake of not debiting the amounts in Profit & Loss Account It also fairly added back such amount to taxable income on writing off as already claimed in earlier years as revenue expenditure. Since this expenditure relates to earlier years including the pres ..... X X X X Extracts X X X X X X X X Extracts X X X X
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