2017 (7) TMI 533

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....assessee is against the action of CIT(A) in sustaining the disallowance of Rs. 24,84,082/- on the ground that it was a prior period expenditure. 3. In brief, the relevant facts are that the appellant is a company incorporated under the provisions of the Companies Act, 1956 and is, inter-alia, engaged in the business of marketing research, serving clients within India as well as outside India. The appellant is a subsidiary of its foreign company based in USA. In the course of assessment proceedings, the Assessing Officer noted that the Tax Auditor's report revealed prior period expenses of Rs. 24,84,082/- which were in the nature of Compensation, Staff Welfare, Travel, Conveyance, etc. The Assessing Officer noted that such prior period expe....

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....d for in the current previous year ending on 31.3.2008 corresponding to the instant assessment year. It was, therefore, explained that this was a regular practice followed over the years and that such expenditure could not be disallowed as prior period expenses. 5. The learned representative further explained that initially in Assessment Year 1996-97, such a dispute was raised by the Assessing Officer for the first time, which had been decided by the CIT(A) in favour of the assessee and in this context he has filed the order of CIT(A) dated 23.3.2000. The learned representative pointed out that the said decision of the CIT(A) has become final and that upto the instant assessment year there has been no disallowance on this score. The learne....

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....llowed by its holding company in USA and, therefore, the bills/details of expenditure of certain expenses, which pertain to 31.3.2007 ending, were received from its Branches after 30.4.2007 and, thus debited in the Profit & Loss Account for the year under consideration, i.e. ending on 31.3.2008. Such expenditure has been treated as a prior period expenditure and disallowed. The learned representative made a statement at Bar that the aforesaid methodology adopted by the assessee has been consistently followed since more than 15 years and that after the initial disallowance in the Assessment Year 1996-97, there has been no disallowance till now. Be that as it may, one point which clearly emerges is that there is no dispute insofar as the natu....