Tribunal overturns CIT(A) order disallowing amortized expenses, emphasizes consistency in decisions.

The Tribunal allowed the appeal, setting aside the CIT(A)'s order that confirmed the disallowance of Rs. 5,44,968 in amortized expenses by the AO. The Tribunal emphasized the importance of consistency in decisions and noted that the Revenue had previously accepted similar expenses in scrutiny and summary assessments without issuing any notice for reassessment. Relying on legal precedents, the Tribunal directed the AO to allow the deferred revenue expenditure claimed by the assessee, ultimately ruling in favor of the appellant.

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Issues:
Challenge to disallowance of amortized expenses incurred by the assessee.

Analysis:
The appeal was against the order confirming the disallowance of Rs. 5,44,968 made by the AO in respect of amortized expenses. The AO disallowed the claim, stating that the expenditure incurred by the assessee did not have a direct nexus to the business or income-earning activities. The AO observed that the expenses were mainly for promotional schemes and not related to the business's regular course. The CIT(A) upheld the disallowance, stating that the AO had not accepted the method of accounting in previous years. However, the assessee argued that the expenses were business-related and had been consistently allowed in previous assessments.

The Tribunal noted that the Revenue had accepted the method of accounting and allowed the deferred revenue expenditure in scrutiny assessments for the years 1994-95 and 1996-97. For other years, the expenditure was accepted in summary assessments. No notice for reopening of assessment was issued for any year, and no s. 263 proceedings were initiated. The Tribunal referred to the principle that each assessment year is independent but highlighted the importance of consistency in decisions. Citing legal precedents, the Tribunal concluded that the expenditure claimed by the assessee should be allowed as a deduction. The order of the CIT(A) was set aside, and the AO was directed to allow the deferred revenue expenditure claimed by the assessee.

In light of the facts, the Tribunal found that the Department had consistently allowed the deferred revenue expenditure in previous assessments. Relying on legal principles and the rule of consistency, the Tribunal held that the expenditure claimed by the assessee should be allowed as a deduction. Therefore, the appeal filed by the appellant was allowed, and the order of the CIT(A) was set aside.

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