M/S. CAMICERIA APPARELS INDIA PVT. LTD.,CHENNAI vs. ACIT, CHENNAI

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ITA 93/CHNY/2014Status: DisposedITAT Chennai12 September 2018AY 2007-083 pages

In favour of the Revenue: the assessee's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The tribunal confirmed the disallowance of pre-paid expenses as they were unascertained provisions. It also upheld the denial of Section 10B deduction, relying on a High Court judgment regarding the ten-year period for reckoning manufacturing commencement.

What were the facts?

The assessee classified an expenditure of ₹14,75,570/- as pre-paid expenses, which the CIT(Appeals) deemed a provision for unascertained expenditure. The assessee also claimed deduction under Section 10B.

What were the issues?

Whether pre-paid expenses, classified as provisions for unascertained expenditure, are allowable. Whether the ten-year period for Section 10B deduction is to be reckoned from the year of manufacturing commencement.

Which sections of the Income-tax Act were involved?

Section 10B

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘C’ BENCH, CHENNAI

Before: SHRI N.R.S. GANESAN & SHRI A. MOHAN ALANKAMONY

Hearing: 13.08.2018Pronounced: 12.09.2018

आदेश /O R D E R

PER N.R.S. GANESAN, JUDICIAL MEMBER:

1.

This appeal of the assessee is directed against the order of the Commissioner of Income Tax (Appeals) (C) – II, dated 20.11.2013 and pertains to assessment year 2007-08.

2.

The first issue arises for consideration is disallowance of ₹14,75,570/-.

3.

We heard Sh. R. Vijayaraghavan, the Ld.counsel for the assessee and Shri R. Clement Ramesh Kumar, the Ld. Departmental Representative. Admittedly, this expenditure of ₹14,75,570/- was classified by the assessee itself as pre-paid expenses. As rightly observed by the CIT(Appeals), it is a provision for expenditure which is unascertained. Therefore, it cannot be allowed during the year under consideration. Hence, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed.

4.

The next issue arises for consideration is grant of deduction under Section 10B of the Act.

5.

We heard Sh. R. Vijayaraghavan, the Ld.counsel for the assessee and Shri R. Clement Ramesh Kumar, the Ld. Departmental Representative. The CIT(Appeals) by placing reliance on the judgment of Madras High Court in Shri Nagesh Chundur v. CIT dated 19.08.2013, found that the period of ten years is to be reckoned from the year in which the undertaking started manufacturing of the products. In view of the above, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed.

6.

In the result, the appeal filed by the assessee is dismissed.

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