TaxTMI 
TaxTMI 
2017 (11) TMI 1051
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.... homes, clinics, medical research and other related activities primarily towards eye care. In the re-assessment made for assessment year 2010-11, the Assessing Officer added net prior period expenditure debited to P&L account at Rs. 49,77,664/-. Aggrieved, the assessee filed an appeal before the CIT(A). The CIT(A) relying on the decision of CIT vs. Jagatjit Industries Limited of the Delhi High Court in ITA No. 848/2010 dated 06.09.2010 allowed the appeal. Aggrieved against that order, the revenue filed this appeal, inter alia, with the following grounds of appeal: 2.1 The learned CIT(A) erred in deleting the addition made under the head "Prior Period Expenses" without appreciating the fact that the expenses so claimed does not belo....
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.... of Passengers and Goods Act, 1963 or non-charging of certain portion of interest in the P&L account, as the case may be, and hence, the respective courts held that the liability arose as per the provisions of the respective Act. In the case of CIT vs. Kalinga Tubes Ltd., (supra) the SC held that the sales tax liability would accrue the moment sales are effected and any dispute as regards quantum of tax liability would not affect accrual of such liability. In the case of CIT vs. St. George Motors the Kerala High Court held that the liability for payment of tax under the taxation of passengers and goods act had accrued by force of the stature itself and the agreement referred to by the tribunal by which the state government had permitted the....
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.... under: "6. -------------------------------------------------------------------- --------------. In the mercantile system of accounting, the liability crystallizes as soon as the entire transaction was effectuated. Examination of the plea made by the appellant shows that the amount in question now being debited to the P&L a/CIT(A) relate to certain bills and invoices which were either received or settled or both in the year of claim. Further, keeping in view the volume and multiplicity of transactions involved and taking into consideration the past business practice, it is also observed that expenditure spilled over to the next year. In such cases for some reasons or other the bills were not taken to have been settled. The said acc....
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.... basis, provision for expenditure cannot be made based on estimates since estimate cannot be accurate. In such high volume low value transaction, the liability in respect of certain bills would not have crystallized as at the year-end on account of various factors. We have already filed an appeal before Commissioner of Income Tax (Appeals)-1 for ay 2012-13 on similar grounds. In CIT vs. Vishnu Industrial Gases (In the High Court of Delhi, ITR No. 229/1988, Decided on: 6th May, 2008) where the department had not disputed that the expenditure was deductible in principle but was only disputing the year in which the deduction could be allowed HELD." 5. The submission of the assessee has been considered and is....