TaxTMI 
TaxTMI 
2016 (4) TMI 388
X X X X Extracts X X X X
X X X X Extracts X X X X
....ce made by the A.O on account of expenditure towards preparatory work. 2. That on the facts and circumstances of the case as well as in law the CIT(A) has erred in deleting the disallowance of Rs. 240.52 lacs on the issue of Work in Progress expenses. 3. That on the facts and circumstances of the case as well as in law the CIT(A) has erred in deleting the disallowance of Rs. 49.31 lacs made by the A.O on account of prior period expenses. 3. The assessee company is a Government of India Undertaking under Ministry of Urban Development and is engaged in the business of execution of various types of civil/electrical/infrastructural/housing and environmental projects all over India and abroad pertaining to State/Central Governments/Publ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ents made to various consultants were produced before the authorities. The Assessing Officer disallowed two third being Rs. 240.52 lacs and made addition to the income of the assessee towards the cost of preliminary expense i.e. expenditure on preparatory work. 5. The assessee also claimed in its Profit and Loss Account, Rs. 76.27 lacs on account of prior period expenditure. The same was disallowed to the extent of Rs. 49.31 lacs related to the payments as piece rate of labour and made and addition by the Assessing Officer. 6. The assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal, thereby allowing above mentioned disallowance made by the Assessing Officer in favour of the asssessee. The CIT(A) held that sin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e the Assessee company is in the business of execution of the project and income from these projects is the main source of income of the assessee company, the expenses incurred in general on these projects commonly debited to the profit and loss account. 9. The Ld. AR submitted that the expenses disallowed by Assessing Officer aggregating to Rs. 49.31 lacs are on account of payment to subcontractors in lieu of work performed by them. These expenses pertain to the work done by the subcontractors beyond the original work order issued to them (sub-contractors). The expenditure was crystallized in the year in which the bill was submitted by the sub-contractor and clients have certified and accepted the extra work/claims by the sub-contractor....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lity." 10. The Ld. AR further submitted that in the earlier Assessment Years, similar expenses were debited and these were disallowed but allowed by CIT(A) in Assessment Years 1986-87, 1987-88, 1988-89, 1989-90, 1990-91, 1991-92, 1992-93 and 2002-03. 11. The Ld. AR further submitted that in view of judgment of Hon'ble ITAT in the case of M/s Sudarshan Overseas Ltd., if any expenditure has to be disallowed, the corresponding income also cannot be taxed. Therefore, if prior period expenses of Rs. 49.31 lacs are disallowed, the income corresponding to these expenses i.e Rs. 76.53 lacs also cannot be taxed since if the expenses are disallowed being prior period, the corresponding income also admittedly pertaining to prior period also cann....