T vs. COMMUTATION SOLUTIONS LTD,CHENNAIVS.ACIT, CORPORATE CIRCLE-3(1), CHENNAI

This appeal of the assessee is directed against the order of the Commissioner of Income Tax (Appeals) -11, Chennai, dated 27.10.2017 and pertains to assessment year 2013-14.

The only issue arises for consideration is disallowance of ₹28,11,240/- towards prior period expenses.

Shri M. Viswanathan, the Ld. representative for the assessee, submitted that the Assessing Officer found that the assessee debited operational expenditure of ₹28,11,240/- towards vehicle hire charges. This was debited to M/s Senthamarai Transport during the period April to December, 2011. According to the Ld. representative, a sum of ₹84 lakhs was already paid as advance to M/s Senthamarai Transport which included ₹28,11,240/- This amount of ₹28,11,240/- was raised by invoice No.137 dated 31.01.2012 and TDS was also deducted and paid to the Government account on 06.07.2012. According to the Ld. representative, the expenses of ₹28,11,240/- were made during the current financial year. The Ld. representative further submitted that the operational expenses as on 31.03.2012 were ₹88,64,265/-. The same was carried forward as opening balance as on 01.04.2012. The assessee has already deducted TDS for the amount of ₹28,11,240/-, which was included in the payment of ₹88,64,265/-, . According to the Ld. representative, this was reversed subsequently and necessary TDS has been made during the year under consideration. Therefore, according to the Ld. representative, the assessee has claimed only the current expenditure and not the prior period expenses.

On the contrary, Shri M. Mathivanan, the Ld. Departmental Representative, submitted that the expenditure of ₹28,11,240/- was paid as per the invoice raised by M/s Senthamarai Transport on 31.01.2012. According to the Ld. D.R., the assessee has also admitted by letters dated 18.03.2016 and 21.03.2016 that TDS was already deducted in respect of this payment. According to the Ld. D.R., since the expenditure is pertaining to assessment year 2012-13, this cannot be claimed during the year under consideration.

We have considered the rival submissions on either side and perused the relevant material available on record. Admittedly, the assessee debited a sum of ₹28,11,240/- in the accounts of M/s Senthamarai Transport under the head “Vehicle Hire Charges” for the period April to December, 2011. Therefore, this pertains to financial year 2011-12 and assessment year 2012-13. Since the assessee is following mercantile system of accounting, this Tribunal is of the considered opinion that the operational expenditure has to be claimed during the relevant assessment year. Admittedly, TDS was also effected. Therefore, this Tribunal is of the considered opinion that the expenditure of ₹28,11,240/- has to be claimed only during the assessment year 2012- 13 and not 2013-14. Therefore, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed.

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