ITAT partially favors assessee on customs duty and deferred revenue expenditure issues. Decision on 27th June, 2023.

The ITAT partially allowed the appeal, ruling in favor of the assessee on both the disallowance of customs duty and deferred revenue expenditure issues. The case was decided on 27th June, 2023.

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Issues involved:
The issues in this case are (i) disallowance of customs duty for Rs. 9.53 Lacs, and (ii) disallowance of deferred revenue expenditure.

Customs Duty Disallowance:
The assessee imported raw material without paying customs duty, intending to export the finished goods. However, due to failure to export, the assessee had to pay customs duty of Rs. 9.53 Lacs. The dispute arose as the AO disallowed this amount, claiming it was not related to the previous year. The ITAT held that since the liability crystallized in the current year, the deduction was allowable, overturning the lower authorities' decision.

Deferred Revenue Expenditure Disallowance:
The assessee incurred expenditure of Rs. 547.30 Lacs on raw material, power, etc., before commencing commercial production. This expenditure was treated as deferred revenue expenditure in the books and written off over 5 years. The AO disallowed a portion of this expenditure, questioning its nature. The ITAT found that the expenditure was revenue in nature and could have been claimed in full in the first year itself. However, due to incomplete details provided by the assessee, the matter was remanded back to the AO for further examination.

Conclusion:
The ITAT partially allowed the appeal for statistical purposes, ruling in favor of the assessee on both the disallowance of customs duty and deferred revenue expenditure issues. The case was pronounced on 27th June, 2023.

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