TaxTMI 
TaxTMI 
2014 (1) TMI 188
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....- "3.1 I have considered the submissions of the assessee but I am unable to accept the same. The assessee has relied on the minutes of meeting held on 7.09.95 to hold that the administrative and overhead charges of 1.5% were payable to it only in respect of the cost of construction of the community center and not on the cost of construction of the residential flats constructed for the Central Government. In my opinion, the minutes does not limit this payment to the cost of construction of the community center alone. Para 3 of the minutes reads as under: "In view of this it was agreed that the expenses incurred by the PSE during the planning, development and execution of the project should be reimbursed to it on actual basis. Further, the administrative charges and contingencies, as incurred by HUDCO in this process should form basis of the actual expenses incurred which can be adjusted out of the surpluses available with the Organisation. It was decided that HUDCO will be allowed an interest component of 17% per annum and an Admn. and overhead charges of 1-1/2% ...... The component of 1-1/2% representing Admn. and other overhead charges may be calculated on the computed cost of t....
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....ccounting, the expenditure which is accrued or crystallized during the year under consideration can only be allowed. The assessee has not been able to establish that the prior period expenses have crystallized during the year under consideration. He, therefore, submitted that the order of authorities below should be sustained. 10. We have carefully considered the submissions of both the sides and perused the material placed before us. It is a settled law that when the assessee is following mercantile system of accounting, the prior period expenses can be allowed in the subsequent year in which such expenses have crystallized. However, we find that none of the lower authorities had examined this aspect. In fact, the assessee has also not given complete details of the prior period expenses and has not explained how such expenses have crystallized during the accounting year relevant to the assessment year under consideration. In view of the above we set aside the orders of lower authorities on this point and restore the matter to the file of the Assessing Officer. We direct the assessee to furnish complete details of prior period expenses of Rs. 1,45,00,000/- and also explain how the....
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....crued on the last day of the accounting year. The assessee has paid the amount of interest in June and August, 1998. 36. Hon'ble Supreme Court in the case of Bharat Earth Movers Vs. CIT, 245 ITR 428 (S.C.) held that where a business liability had arisen in the accounting year, the deduction should be allowed although the liability might have been quantified and discharged at a future date. What should be certain is the incurring of liability. It should also be capable of being estimated with reasonable certainty though the actual quantification may not be possible. If the requirements are satisfied, the liability is not a contingent one. The liability is in presenti though it will be discharged at a future date. It does not make any difference if the future date on which the liability shall have to be discharged is not certain. 37. If the facts of the case are examined in the light of decision of Hon'ble Supreme Court, we find that interest has accrued at definite rate fixed by the parties. The assessee is following mercantile system of accounting. Therefore, the interest liability has crystallized during the year under consideration and is allowable as deduction u/s 37(1) of the....
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....directions to decide the matter on merits as per the provisions of law. Since identical issue is involved we set aside the matter to the file of Assessing Officer with the similar directions. However, he will keep in view the decision of Hon'ble Jurisdictional High Court in the case of CIT Vs. Thirani Chemicals (2007) 290 ITR 196 and the decision of Apex Court in the case of Madras Industrial Investment Corporation Ltd. Vs. CIT (1997) 225 ITR 802, while deciding the issue." Following this order, the matter is restored to the file of the AO for deciding the issue again after hearing the assessee and considering the details and also taking aforesaid decisions into account. Thus, these grounds are treated as allowed." 16. Respectfully following the above order of the Tribunal, we set aside this issue to the file of the Assessing Officer with the direction to decide the same afresh keeping in view the directions of the Tribunal given above. Needless to say that he will allow adequate opportunity of being heard to the assessee. 17. Ground No.5 of the assessee's appeal reads as under:- "The learned Assessing Officer has erred in fact in disallowing a sum of Rs.1,32,822/- being deprec....