TMI Blog2017 (9) TMI 1902X X X X Extracts X X X X X X X X Extracts X X X X ..... AO and allow the grounds of appeal of the assessee for statistical purposes. Prior period expenditure - Amount was crystallized during the year, adding back the expenditure on the ground of not having been accounted on mercantile system is bad in law - HELD THAT:- Assessee in the assessment proceedings could not substantiate the claim with proper explanations and evidence, therefore, in the interest of substantial justice, we provide one more opportunity as prayed by the ld. AR to represent its case before the AO with the evidences/documents of prior period expenses and the AO shall examine the genuineness and crystallisation of the expenses in the financial year and assessee should be provided adequate opportunity of hearing and shall cooperate in submitting the information. Accordingly, we restore the disputed issue to the file of AO and allow the grounds of appeal of the assessee for statistical purposes. - ITA No.177/CTK/2013, 163/CTK/2013 - - - Dated:- 20-9-2017 - Shri N.S.Saini, AM And Shri Pavan Kumar Gadale, JM Revenue by: Shri Kunal Singh, CITDR Assessee by: Shri P.Venugopal Rao, AR ORDER Shri Pavan Kumar Gadale, These are the cross a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ations are not satisfactory and accounting system followed by the assessee does not permit such adjustments and made additions and passed the order u/s.143(3) of the Act dated 29.12.2011. 4. Aggrieved by the order of AO, the assessee has filed an appeal with the CIT(A). In the appellate proceedings ld. AR of the assessee argued the grounds and reiterated the submissions made before the AO. On the disputed issue of peripheral development expenses ld. CIT(A) considered the findings of AO and found that out of total development expenditure the contribution of the assessee was towards the special wards in the Hospitals and the assessee has filed the details of major expenses referred at page 70 of the order further ld. CIT(A) has called for the remand report from AO on the peripheral development expenses and referred at para 6.2.1 of the order and finally in the course of appellate proceedings, the ld. AR submitted that the order of the ITAT dated 21.12.2012 dealt on peripheral development expenditure and the ld. CIT(A) considered these facts and has partly allowed the appeal and observed at para 6.3 of the order which reads as under :- 6.3 I have carefully considered the matter. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e liability has been crystallised in this year and partly allowed the grounds of appeal of the assessee observing at para 7.3 page 73 of the order which is as under :- 7.3 I have carefully considered the matter. While the appellant has claimed prior period expenses of ₹ 20,52,394/-, before the AO and before me it has submitted only a single piece of evidence relating to payment of tax for earlier years in respect of a old pay- loader in pursuance of the letter of RTO, Keonjhar No.613/BBL/2008 dated 25.11.08. In view of the same, the addition of ₹ 2,35,878/- relating to the old pay-loader being an allowable expenditure as the same crystallized during the year is not sustainable and hence deleted. In respect of the balance amount of ₹ 18,16,516/-, the assessee has not furnished any paper or evidence in support of its ground taken in appeal that the liabilities crystalised during the year. In view of the same, I do not see any infirmity in the action of the AO in adding the same. Thus, the addition is sustained at ₹ 18,16,516/-. The ground No.3 is allowed in part. 5. Aggrieved by the order of CIT(A), assessee has filed an appeal before the Tribunal. Befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No.551/CTK/2012, order dated 18.12.2012 at para 9.1 page 9 where the Tribunal has dealt on the each issue of prior period expenses which reads as under :- 9.1. On the second issue being prior period expenses, we find the contention of the learned Counsel of the assessee justified that it is nobody's case that the accounting of prior period expenses have to be otherwise. A practical method of accounting is considered mercantile when the concept of deriving real income in the hands of the assessee in year to year basis is a mundane requirement insofar as income tax is levied for the impugned Assessment Year only. The very intention on the basis to claim it as prior period expenses indicates that these expenses were not known to them but pertain to that year and they could not have been accounted in the year when they may have accrued which deficiency was required to be fulfilled by the learned CIT(A) when the substantial amount was deleted by him as computed by the Assessing Officer as prior period expenses. The sustenance of part addition on account of prior period expenses have been dealt item- wise by him in his order, which we are inclined to reproduce as follows, has to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to work order of the assessee dated 31.10.2002 and the bills were raised by this concern on the assessee on 09.12.2004, 24.10.2006, 05.09.2000 and 05.09.2003. Accordingly, provision should have been made in the relevant financial years. In any case, no evidence was furnished that the same accrued during the year. A mere glance of the above would suggest that the expenses are of a nature which may not have crystallized even after a gap of one year was explained by the assessee appellant before him. He required the evidence of their accrual in the impugned Assessment Year when it was the assessee's claim that they have crystallized in the impugned Assessment Year insofar as they all are revenue in nature and cannot be considered for disallowance even if they were incurred or accrued in the year they pertain to. In other words, we find the contention of the learned Counsel of the assessee appropriate that there is no method to foresee as to what revenue expenditure would have to be provided for after end of the Assessment Year if the accounts are to be balanced for approval by the share holders within six months of the close of the financial year. Therefore, a concept of claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cases. 5. On the facts and in the circumstances of the case, the Ld. CIT(A) is not justified in ignoring the fact that AS-2 (revised) which deals with valuation of inventories does not apply to mineral ores to the extent that they are measured at net realizable value in accordance with well established practices in these industries. 6. On the facts and in the circumstances of the case, the Ld. CIT(A) is not justified in deleting the addition when reliance placed by the Ld CIT(A) on the case laws were pronounced in different context and under different facts and circumstances. 7. Orp-tbe'facts and in the circumstances of the case, the Ld. CIT(A) is not justified in deleting the addition and accepting the view of the Ld CIT(A) that the method of valuation adopted by it is an acceptable method of accounting for the reason that it was consistently followed by it and by other similar entities. 8. On the facts and in the circumstances of the case, the Ld. CIT(A) is not justified in deleting the addition made by the AO towards peripheral development expenses in respect of cabins in Capital Hospital and amount paid to BMC, when the same was not incidental to the business of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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