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of <h1>Appeal allowed for prior period expenditure, demurrages disallowance dismissed. Order issued on 1st February 2019.</h1> <h3>M/s Hindustan Shipyard Ltd. Versus Dy. Commissioner of Income Tax, Circle-3 (1), Visakhapatnam</h3> M/s Hindustan Shipyard Ltd. Versus Dy. Commissioner of Income Tax, Circle-3 (1), Visakhapatnam - TMI Issues:1. Disallowance of prior period expenditure.2. Disallowance of demurrages amount.Analysis:Issue 1: Disallowance of Prior Period ExpenditureThe appeal was filed against the order of the Commissioner of Income Tax (Appeals) regarding the disallowance of prior period expenditure of &8377; 3,45,98,000. The Assessing Officer disallowed this amount as it did not relate to the assessment year under consideration. The assessee argued that the expenses were genuine and related to earlier years, but could not be claimed due to procedural delays. The AO held the prior period adjustments as disallowable, supported by various decisions. The CIT(A) confirmed the AO's decision due to lack of evidence. The Tribunal considered the procedural delays faced by the assessee due to the company's size and laid down procedures. Citing relevant case laws, the Tribunal held that if the expenditure crystallized in the subsequent year due to regular practice, it cannot be denied. The Tribunal remitted the case back to the CIT(A) to allow the expenditure as per the business practice regularly followed by the assessee.Issue 2: Disallowance of DemurragesThe demurrages amounting to &8377; 12,59,277 was also disallowed. During the appeal hearing, the assessee did not press this ground, leading to the dismissal of Ground No.3. The Tribunal partly allowed the appeal for statistical purposes.In conclusion, the Tribunal allowed the appeal regarding the disallowance of prior period expenditure, emphasizing the importance of following regular business practices. The demurrages disallowance was dismissed as not pressed. The order was pronounced on 1st February, 2019.
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