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Appeal Allowed: Pre-Operative Expenses Deduction Upheld The Appellate Tribunal ITAT Pune allowed the appeal, setting aside the addition of Rs. 9.00 lakh as pre-operative expenses under section 35D of the ...
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The Appellate Tribunal ITAT Pune allowed the appeal, setting aside the addition of Rs. 9.00 lakh as pre-operative expenses under section 35D of the Income-tax Act for the assessment year 2011-12. The decision was based on the consistent allowance of the deduction in the preceding assessment years, emphasizing the importance of maintaining uniformity in treatment across consecutive years.
Issues: Confirmation of addition of Rs. 9.00 lakh as pre-operative expenses under section 35D of the Income-tax Act, 1961.
Analysis: The appeal before the Appellate Tribunal ITAT Pune arose from the order of the Commissioner of Income-tax (Appeals)-6, Pune pertaining to the assessment year 2011-12. The sole issue challenged in the appeal was the confirmation of the addition of Rs. 9.00 lakh by the Assessing Officer under section 35D of the Income-tax Act, treating it as pre-operative expenses. The Assessing Officer had disallowed this amount after examining the details of expenses claimed by the assessee. The assessee had claimed deduction of Rs. 9.00 lakh towards pre-operative expenses, which was a part of the total expenditure incurred. The AO found that only a portion of the total amount qualified for deduction, and hence, disallowed the remaining sum. This disallowance was upheld in the first appeal, leading to the assessee's grievance against the addition.
During the proceedings, it was revealed that the assessee had consistently claimed and been allowed a deduction of Rs. 9.00 lakh in the assessments for the assessment years 2009-10 and 2010-11. The AO's report indicated that the deduction was initially not granted for the A.Y. 2009-10 but was later accepted by the ld. CIT(A). Subsequently, the deduction was allowed for the A.Y. 2010-11. Given this consistent allowance over the preceding years, the Tribunal held that the assessee was entitled to the deduction of Rs. 9.00 lakh for the year under consideration as well. Relying on the principle of consistency, the Tribunal overturned the impugned order and granted the deduction of Rs. 9.00 lakh to the assessee for the assessment year 2011-12.
In conclusion, the Appellate Tribunal ITAT Pune allowed the appeal, thereby setting aside the addition of Rs. 9.00 lakh as pre-operative expenses under section 35D of the Income-tax Act for the assessment year 2011-12. The decision was based on the consistent allowance of the deduction in the preceding assessment years, emphasizing the importance of maintaining uniformity in treatment across consecutive years.
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