EXCEL INDUSTRIES LTD,MUMBAI vs. DCIT CC 6(3), MUMBAI

PER BENCH

These appeals were originally adjudicated by the Tribunal vide order dated 09.01.2023, but the additional ground related to claim of ‘prior period expenses’ was omitted to be adjudicated and therefore, these appeals were recalled to the extent of adjudication of the issue of the pri dated 03.02.2025 vid
Registry has fixed additional ground of 2. The additional
2010-11 is reproduce
Deduction in On the facts a the appellant allow deducti the said expe
3. We have heard dispute and perused
Ld. counsel for the a and income. The Ld assessee during the Assessing Officer. Th under:
“1. Prior Pe
During the p
Year, the Rs.1,89,52,9
computing th
31" March, 2
In this regar
Rs.1, 41,51, debited, the ITA Nos. 5472

ior period expenses by the order de MA No. 489 to 492/Mum/202
these appeals before us for the assessee related to prior per ground which was raised in a ed as under:
n respect of prior period expenses :
and in the circumstances of the case and t prays that the Assessing Officer be dir ion of prior period expenses in the year nses are debited to the Profit and Loss A rival submissions of the parties the relevant material on record ssessee filed detail of the prior d. counsel referred to the lette course of the assessment pro he relevant para of said letter is eriod Expenses previous year relevant to the above As Prior Period Expenses (Net) amo
924/- have been added to the inco he business income for the previous y
2010. d, we would like to state that the expe
,738/- being related to a prior year details of which are enclosed in Anne
Excel Industries Ltd
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2 to 5474/MUM/2017 &
914/Mum/2018
r of the Tribunal
23 and thus the adjudication of riod expenses.
assessment year d in law, rected to in which Account.
s on the issue in d. Before us, the period expenses ers sent by the oceedings to the s reproduced as ssessment ounting to ome while year ended enditure of has been exure XXIV of the Tax A reference).
We would f accounted i assessment supplier dur earlier year current year allowed in th
This require which leads this regard expenditure the bills we booked acco by the trib considering allowable, t unreasonabl tax liability manner.
We are enc locations wh shall be su same in du
3.1 From above, it Rs.1,41,51,738/- was under consideration.
required to file all th substantiate that w period expenses was From the submission reproduced above, it ITA Nos. 5472

Audit Report (enclosed herewith for y further like to submit that this expe in the previous year relevant to t year due to non-receipt of the invoice ring earlier years. These are also not rs and therefore ought to be allow r otherwise such expenditure may h he prior years.
es reopening of assessment of ear to hassles to us and also to the depa we further would like to submit is related to earlier year, however as ere traced by us the expenditure ordingly. In this regard the observati bunal for the assessment years
(refer Para 8). If the expenditure is the claim should not be denied by le approach of "Head I win Tail you of an assessee has to be determin closing herewith vouchers for Roha hich are debited to prior period expens ubmitting other vouchers pertaini e course.”
t is evident that prior period s debited in profit and loss acco
For claim of said expenses, th he documentary evidence in su whether the liability correspon s crystallized in the year under n of the assessee before the Asse t is evident that assessee had Excel Industries Ltd
3
2 to 5474/MUM/2017 &
914/Mum/2018
your ready enditure is the above es from the claimed in wed in the have to be rlier years artment. In t that the and when has been ions made is worth otherwise y adopting loose" The ned in fair and Lote se and we ng to the expenditure of ount for the year he assessee was pport thereof to nding the prior r consideration.
essing Officer as d filed only part information before h the decision in the ca in ITA No. 5630/Mum prior period expens consideration. We ha by the assessee, the considered as crystal of the Tribunal is rep
“6. Mr. Soh assessee, su a very insign became cons under; cons considered submitted it to light only expenditure tends to los pertains, o subsequent year. Hence, removed by when the exp the total, Mr supported th
7. We have end also as for asst. Yea to asst. Yea amount was was disallow in the books
Tribunal exp adopt the po claim was ITA Nos. 5472

im. The Ld. counsel for the ass ase of the assessee in assessmen m/1991 and submitted that foll ses should be allowed in th ave considered the decision of th e Tribunal has noted that expe llized during the year. The relev produced as under:
hrab E, Dastur, the learned couns ubmitted that the impugried expenditu nificant part of the total, expenditure.
scious of the said expenditure only in sideration and hence the same s as crystallized during the year. It is quite normal in large companies tha y in the subsequent year that a pertained to earlier year and hence se in both the years - in the year to n account of non-provision, and year on account of it being related
, it was contended that this anomaly y adopting a pragmatic approach p xpenditure claimed is a very small per r. Hareshwar Sharma, the learned D.R he orders of the lower authorities, considered the rival contentions. A found by the Tribunal in the order c ar 1986-87, the impugned expenditur ar 1986-87. The claim for deducti s also made in asst. Year 1986-87-bu wed on the ground that no entries, w s, When the manner reached the Tri pressed the view that the departme olicy of Head I win’ and Tail you lose also made in asst. year 1987-88,
Excel Industries Ltd
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2 to 5474/MUM/2017 &
914/Mum/2018
sessee relied on nt year 1987-88
lowing the same he year under he Tribunal cited enses should be vant submission el for the ure formed
Assessee:
n the year should be was also at it comes particular e assessee o which it d in the to earlier should be particularly rcentage of R. strongly
Admittedly, cited supra re pertains on of this ut the sane wore made ibunal; the ent cannot
. Since the , Tribunal directed that 1987-88; th expenditure f considered.
words, according to our understand e Tribunal, If the expenditure, is he claim should not be denied by ad le approach of 'Head I win - tall you of an assessee has to be determined e assessee, by way of abundant caut und in both the years, i.e: in asst, Yea in asst. Year 1987-88, Since the ass w its claim in ass, Year 1987-88 le ideration, the same should now be d be in conformity with the order of th ent year 1986-87.”
CL electromet Private Limited ve mann.com 250, the coordinate hat where assessee is not abl es have been crystallised durin allowed as deduction. The Hon’
f Saurashtra Cement and chem d in 213 ITR 523, held that me a transaction of an earlier ye n the earlier year unless it ca ned and crystallised in the year ntaining accounts on mercantile e was required to explain when
Excel Industries Ltd
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asst. Year the said al could be o observed ake a fair ee. It was proach' for ding of the otherwise dopting, an u lose'. The d in a fair tion would ar 1986-87
sessee did e, the year e allowed, he Tribunal ersus additional e bench of the le to prove that g relevant year,
’ble Gujrat High mical industries rely because an ear, it does not an be said that r in the question e basis. In our the claim of the liability was made u accepted the liability statutory order in for payment in respec circumstances has t crystallisation of the assessee has not crystallization of the consideration. Theref back to the file of th assessee to file all t period expenses cla during the year unde appeal of the asse purposes.
5. The additional g identical to the groun
11, therefore, follow raised in remaining
Assessing Officer for grounds raised in statistical purposes.
ITA Nos. 5472

upon the assessee , when the to make the payment , whethe rcing the liability on the assesse ct of the liability was ma to be taken into consideration liability in the year under con filed complete information e prior period expenses during fore, we feel it appropriate to res he Assessing Officer with the the necessary evidences in sup aimed by the assessee had be er consideration. The additiona essee is accordingly allowed ground raised in other assessm nd adjudicated above in assessm wing our finding above, the ad years are also restored back to r adjudication as stated above.
all the assessment years a Excel Industries Ltd
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2 to 5474/MUM/2017 &
914/Mum/2018
e assessee had er there was any ee and when the ade. All these for determining nsideration. The in respect of the year under store the matter direction to the pport that prior een crystallized al ground of the for statistical ment years being ment year 2010- dditional ground o the file of the . The additional are allowed for 6. The appeals of t of appeal are accordin
Order pronoun (RAJ KUMAR C
JUDICIAL M
Mumbai;
Dated: 25/03/2025
Rahul Sharma, Sr. P.S.

Copy of the Order forward
1. The Appellant
2. The Respondent.
3. CIT
4. DR, ITAT, Mumbai
5. Guard file.

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ITA Nos. 5472

the assessee to the extent of add ngly disposed off as stated abov ced in the open Court on 25/0
d/-
S
CHAUHAN)
(OM PRAK
MEMBER
ACCOUNTA ded to :

BY ORDER

(Assistant Re

ITAT, Mu

Excel Industries Ltd
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2 to 5474/MUM/2017 &
914/Mum/2018
ditional grounds ve.
03/2025. KASH KANT)
ANT MEMBER
R, gistrar) umbai