2015 (10) TMI 1595

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....012 pertaining to Assessment Year 2010-11. 2. In this appeal, although assessee has raised multiple Grounds of appeal but the solitary grievance is with regard to a disallowance of Rs. 38,98,474/-, which represented interest expenditure paid to M/s. Hindalco Industries Ltd. The appellant is a company, engaged in the business of production of Winding Wire and Enamelled Wire. Assessee purchases its principal raw material, namely, copper from M/s Hindalco Industries Ltd. The aforesaid amount reflected interest charged by Hindalco Industries Ltd, on account of delayed payment of dues by assessee. The Assessing Officer noted that the interest expenditure related to the period ending on 31.03.2009, which corresponded to immediately preceding a....

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....purchases effected from Hindalco Industries Ltd. in the preceding year and, therefore, it was a prior period expenditure, thus the lower authorities have rightly disallowed the impugned expenditure. 5. We have carefully considered the rival submissions. Factually speaking, there is considerable strength in the plea set-up by the assessee that liability in respect of the impugned expenditure of Rs. 38,98,474/- has crystallized only on the receipt of debit notes from Hindalco Industries Ltd, in the current assessment year. No doubt, interest has been charged by Hindalco Industries Ltd, in respect of purchases effected by the assessee in the earlier year, but the liability to pay interest has indeed crystallized only when the debit notes fo....

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....onsideration before him i.e. assessment year 2003-04. So however, the plea of the assessee was that the expenditure was incurred in terms of an agreement entered in August 2002, but the same was retrospectively effective from January 1, 2002. On the strength of the said agreement, it was canvassed that though the impugned expenses were incurred during the period January 2002, to March 2002 but the liability therein had crystallized only on execution of the agreement in August 2002 and, therefore, such expense was an allowable deduction in the assessment year 2003-04. The said position was affirmed by the Hon'ble Delhi High Court in the case of CIT Vs. Exxon Mobil Lubricants P. Ltd. (supra). The aforesaid discussion would reveal that dec....