TMI Blog2021 (9) TMI 1256X X X X Extracts X X X X X X X X Extracts X X X X ..... of branches in Mumbai and Gurgaon. In the books of account, the assessee chose to treat these expenses as deferred revenue expenses pre-operative expenses and was claiming proportionate amount every year. The assessee has chosen to claim proportionate amount under Income tax Act also while computing total income. Under the Income tax Act, the total income is computed in accordance with the provisions of the Act. The issue relating to allowability of 'deferred revenue expenses' has been examined by the Ahmedabad special bench in the case of ACIT vs. Ashima Syntex Ltd. [ 2006 (3) TMI 188 - ITAT AHMEDABAD-B] In the instant case nature of expenses claimed by the assessee under deferred revenue expenses/pre-operative expenses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u and it relates to the assessment year 2012-13. The assessee is aggrieved by the decision of Ld. CIT(A) in confirming disallowance of deferred revenue expenditure of ₹ 93,02,208/- and pre-operative expenses of ₹ 29,16,418/- made by the AO. 2. The assessee is engaged in the business of selling home furniture products. It had opened branches in Mumbai and Gurgaon in the earlier years. The expenditure incurred on opening and publicity of branches was treated as deferred revenue expenditure and pre-operative expenses in books of accounts. Accordingly, they were amortised over a period of time in the books. In the income tax computation also, the assessee claimed proportionate amount of expenditure, every year. According to Ld. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he disallowance made by the AO should be deleted. 5. On the contrary, the Ld. D.R. submitted that the AO has extracted the details of expenditure claimed by the assessee in the assessment order. A perusal of the same would show that they are in the nature of electricity charges, housekeeping maintenance, security charges, salaries, advertisement, business development expenses, rent expenses, travelling expenses etc. The Ld. D.R. further submitted that the concept of 'deferred revenue expenses' is not there under Income tax Act. Further the above said expenses are not capital expenditure eligible for depreciation, but they are in the nature of revenue expenses only. He submitted that it is an admitted fact that these expenses ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revenue expenses' has been examined by the Ahmedabad special bench in the case of ACIT vs. Ashima Syntex Ltd. ( 100 ITD 247), wherein following principles have been laid down in conclusion:- 14. To conclude, the position emerging from the above discussion can be summed up as follows:-- - the nature of the expenditure treated as a deferred revenue expenditure in the books needs to be properly analysed before taking a view on its allowability or otherwise under the provisions of the Act; - where such expenditure results in the creation of any capital asset (tangible or intangible), a case can be made out to treat the same as a capital expenditure with corresponding allowability of depreciation in accordance with law; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Income tax Act and hence the revenue expenses incurred in an earlier year cannot be allowed as deduction during the year under consideration. The various case laws relied upon by Ld. A.R. have been rendered in a different context. 9. The Ld. A.R. contended that the claim of the assessee should be allowed under the Principle of Consistency, since similar amortisation claim made in the earlier years have been allowed. However, as rightly submitted by Ld. D.R., the returns of income filed for earlier years have been processed u/s. 143(1) of the Act and hence there was no scrutiny of similar claims made in the earlier years by the AO. Hence the principle of consistency will not apply to this claim. 10. In view of the foregoing discus ..... X X X X Extracts X X X X X X X X Extracts X X X X
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