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Income Tax Appellate Tribunal, DELHI BENCH “G” NEW DELHI
Before: SHRI AMIT SHUKLA & SHRI O.P.MEENA
आदेश /O R D E R
PER O. P. MEENA, AM:
This appeal by the Assessee is directed against the order of learned Commissioner of Income tax (Appeals)-17, New Delhi (in short “the CIT (A)”) dated 20.07.2016 for the Assessment Year 2012-13.
Ground No.1 & 2 states that Ld. CIT (A) has erred in disallowing a sum of Rs. 2,02,993 being prior period expenses of which provision could not be made in earlier year`s. 3. None appeared for the assessee. However, Ld. D.R. is present hence, we are deciding the issue on the basis of records.
Salora International Ltd. v. ACIT 22(1) New Delhi / I.T.A.No.5105/Del/2016/A.Y. 121-3 Page 2 of 3
Succinct facts are that the assessee has claimed prior period expenses of Rs. 2,00,993 which were crystallized and paid during the year under consideration. However, the AO has disallowed the same as the assessee is following mercantile system of accounting, hence, expenses are not allowable as deduction. The CIT (A) has also confirmed the same.
We have heard the Ld. D.R. The perusal of findings of assessment order reveals that expenses of Rs. 1,19,993 pertains payment made to BSNL as full and final as per their final letter dated 26.12.2011 and paid on 28.12.2011 through SBI Rs. 1,04,108 after adjustment of securities of Rs. 15,200. Thus, this expenditure is crystallized during the year under consideration and paid during the year under consideration, hence, disallowance of these expenses are not justified. Further, expenses of Rs. 12,014 pertained from 16.03.2011 to 15.03.2011 of internet use, part of which was paid in previous year but bill has been received in May 2011 and paid on 21.05.2011. Similarly, computer expenses of Rs. 8,900 were paid on 25.03.2011 as bill was received in the month of May 2011. Similarly, electricity bill of Rs. 14,280 of April and bill of Rs. 15,384 of May paid in the month of August 2011. The remaining expenses of mobile bill of March paid in April, 2011. Thus, considering the nature of expenses of which bills were received during year under consideration and paid during year under consideration are therefore, crystallized and paid during years, hence, same are allowable as expenses for the assessment year
Salora International Ltd. v. ACIT 22(1) New Delhi / I.T.A.No.5105/Del/2016/A.Y. 121-3 Page 3 of 3 under consideration even though the assessee follows mercantile system of accounting. Accordingly, we held that the AO was not justified in making disallowance of prior period expenses. In view of this matter, the disallowance of Rs. 2,00,993 on account of prior period expenses are deleted.
Accordingly, Ground No. 1 and 2 of appeal is allowed.
In the result, the appeal of the assessee stands allowed.
The order pronounced in the open Court on 07.11.2019.