TaxTMI 
TaxTMI 
2021 (3) TMI 743
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....rt vide order dated 15.11.2017 on the following substantial questions of law: (i) Whether the tribunal erred in law in not holding that as the provisions of Schedule VI of the Companies Act, 1956 and the applicable Accounting Standard, prior period expenditure of Rs. 14,37,10,403/- which is disclosed as part of notes to accounts and also reduced from the accumulated balance of the profit and loss account should be considered in the facts and circumstances of the case? (ii) Whether the tribunal is justified in law in setting aside the issue to the record of the Commissioner of Income Tax (Appeals) with a direction to re-examine the issue in the light of provisions of Schedule VI of the Companies Act, 1956 and the applicable Accounting S....
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....der on 31.01.2013 under Section 143(3) of the Act. The Assessing Officer made addition of Rs. 14,37,10,403/- being the prior period expenses for the purposes of determining book profits at Rs. 4,07,74,113/- under the provisions of Section 115JB of the Act. Being aggrieved, the assessee filed an appeal before the Commissioner of Income Tax (Appeals) who by an order dated 30.09.2013 deleted the addition of prior period expenses. Being aggrieved, the revenue filed an appeal before the Income Tax Appellate Tribunal (hereinafter referred to as 'the tribunal' for short). The tribunal vide order dated 29.12.2015 set aside the order of the Commissioner of Income Tax (Appeals) and remitted the matter to Commissioner of Income Tax (Appeals). ....
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....ccounting standard-5, Net profit or loss of the period, prior period items and changes in accounting policies the prior period item should be separately disclosed. It is submitted that just because the information is shown separately, adverse inference cannot be drawn that the same is not debited to the profit and loss account. It is also submitted that the tribunal was not justified in remanding the matter to Commissioner of Income Tax (Appeals) and it ought to have upheld the order of the Commissioner of Income Tax (Appeals). In support of aforesaid submissions, reliance has been placed on decisions in 'TAMIL NADU CEMENTS CORPORATION LTD. VS. JCIT', (2012) 349 ITR 58 (MADRAS), 'CIT VS. KHAITAN CHEMICALS & FERTILIZERS LTD',....
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....llowance of prior period expenses in the following terms: 4. DISALLOWANCE OF PRIOR PERIOD EXPENSES: Rs. 14,37,10,403/- [GR.NO.3 & 4] 3.1 The grounds No.3 and 4 are in regard to the addition of Rs. 14,37,10,403/- towards prior period expenses under the provisions of Section 115JB of the Act. The AO noted that in the Statement of Computation of Total Income under Section 115JB, the appellant company deducted prior period expenses directly adjusted in the opening reserve amounting to Rs. 14,37,10,403/-. This amount was not routed through the profit and loss account. The AO called for clarification on this issue and vide letter dated 31.01.2013 the appellant submitted its reply. However, the AO was not satisfied with the appellant's su....
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....y were to be shown separately so that their impact on the current net profit or loss could be perceived. The Hon'ble High Court of Madras has concurred with the decision of the Hon'ble High Court of Delhi while deciding the case of Tamil Nadu Cements Corporation Ltd. Vs. JCIT (Spl. Range) (2012) 349 ITR 58 (Madras). Following the decision of the Hon'ble High Courts of Delhi and Madras, the appellant is eligible to adjust the prior period expenses while computing the book profit under Section 115JB of the Act irrespective of whether such prior period expenses are shown separately or not. In view of the legal position discussed above, this ground of appeal is allowed in favour of the appellant. 6. The aforesaid finding has been ....