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Tribunal allows appeal, grants deduction for preliminary expenses under Income Tax Act The Tribunal allowed the assessee's appeal, overturning the disallowance of Rs. 9,00,000 claimed as preliminary expenses under section 35D of the Income ...
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Tribunal allows appeal, grants deduction for preliminary expenses under Income Tax Act
The Tribunal allowed the assessee's appeal, overturning the disallowance of Rs. 9,00,000 claimed as preliminary expenses under section 35D of the Income Tax Act. The Tribunal relied on the principle of consistency, as the deduction had been allowed in previous assessments, granting the deduction for the current assessment year as well. The order in favor of the assessee was pronounced on 21st June 2021.
Issues: Confirmation of addition of Rs. 9,00,000 disallowing claim u/s.35D of the Act.
Analysis: The appeal pertains to the confirmation of the addition of Rs. 9,00,000 by the Ld. CIT(Appeals) disallowing the claim under section 35D of the Income Tax Act, 1961. The assessee, engaged in manufacturing automobiles & auto parts, filed its return of income declaring total income at Rs. Nil for the assessment year 2012-13. During scrutiny, the Assessing Officer disallowed Rs. 5,82,110 deposited as employee's PF contribution beyond specified dates under section 36(1)(va) r.w.s.2(24)(x) of the Act. Additionally, the Assessing Officer disallowed Rs. 9,00,000 claimed as preliminary expenses under section 35D, as it did not qualify under the provisions of the Act.
The Ld. Counsel for the assessee argued that the matter is covered by a decision of the Pune Bench of the Tribunal in the assessee's own case for the assessment year 2011-12. The Tribunal in the earlier case held that since the deduction of Rs. 9,00,000 was consistently allowed in the assessments for the AYs 2009-10 and 2010-11, the assessee is entitled to the deduction for the consecutive 3rd year in line, i.e., the assessment year 2011-12. Following the principle of consistency, the Tribunal allowed the deduction of Rs. 9,00,000 for the year under consideration as well.
The Tribunal, in line with its earlier decision, allowed the grounds raised by the assessee and overturned the impugned order, granting the deduction of Rs. 9,00,000. Consequently, the appeal of the assessee was allowed, and the order was pronounced on 21st June 2021.
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