2010 (5) TMI 849

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....he authorities below and considered the material available on record. 3. In the assessment year 2003-04 it was noticed by the AO that the assessee had debited ₹ 83,08,212/- to the profit & loss account for the expenditure pertaining to earlier year. The assessee had itself disallowed ₹ 76,05,745/- in the computation of income and balance amount of ₹ 7,02,567/- was claimed as allowable. It was explained before the AO that the liability for such payment has been crystallized during the year under consideration and it was eligible for deduction. The claim of the assessee was not accepted by the AO because no evidence was produced to show expenses crystallized during the year. The claim of the assessee was rejected. It was br....

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....of dismantling or erection of certain machinery at Mundra and unless the certificate of completion of all the works was obtained, the claim could not be admitted. On the bill itself it was noticed that certificate of completion of dismantling/erection was given in the month of May, 2002 which falls in the accounting period relevant to the assessment year under appeal i. e. assessment year 2003- 04. The learned CIT(A) on the basis of the material on record found that this amount of prior period expenditure had crystallized during the year under consideration. Therefore, it is to be allowed as deduction. The amount which crystallized during the assessment year under appeal was allowed as deduction. 4. In the assessment year 2004-05 the asses....

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.... case of Metal Box Company 73 ITR 53 held that "liability accrued during the year would be considered for the purpose of deduction." The Hon'ble Allahabad High Court in the case of CIT Vs Appollo Textiles Agency held as under: (283/ITR/591) "The assessee dealt in staple and yearn. For the assessment y8ear 1978-79, it claimed ₹ 15,498 representing additional demand for sales tax liability on it for the earlier years. The authorities below disallowed the claim but the Tribunal held that the demand of sales tax was the additional demand created by the sales tax authorities on November 2, 1976, and therefore t4he additional demand created in the relevant assessment year ought to have been allowed as a deduction. On a reference at the in....