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| The Tax Publishers2020 TaxPub(DT) 4138 (Del-Trib) INCOME TAX ACT, 1961
Section 37(1)
Where AO wrongly added prior period expenses especially when it was duly accepted by department in almost all years and further, nature of these expenses clearly shows that these might pertain to earlier years but crystallized only in current assessment year 2006- 07, therefore, these aren't expenses pertaining to earlier year's fully allowable under section 37(1), addition made by AO was deleted.
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Business expenditure - Prior period expenses - Allowability - Expenses were allowed in previous year
AO completed the assessment under section 143(3) and notice under section 148 was issued to assessee. In response to the same, assessee stated that the original return filed under section 139(1) might be treated as return filed in response to notice under section 148. Assessee pleaded for supply of reasons recorded for issuance of notice under section 148 which was duly supplied to assessee. Consequently, assessee filed objections to assumption of jurisdiction under section 147. After adopting the prescribed procedure, AO made the addition on account of prior period expenses. Held: It appeared that AO wrongly added prior period expenses especially when it was duly accepted by department in almost all years and solely additions made during assessment year 2009-10 were duly struck down by CIT(A). Further, nature of these expenses clearly shows that these might pertain to earlier years but crystallized only in current assessment year 2006- 07. Therefore, these aren't expenses pertaining to earlier year's fully allowable under section 37(1), addition made by AO was deleted.
REFERRED :
FAVOUR : In assessee's favour
A.Y. : 2006-07
INCOME TAX ACT, 1961
Section 37(1)
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