AI Drafter 
TaxTMI 
TaxTMI 
2017 (10) TMI 1577
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....the case, the ld CIT(A) has erred by not appreciating that during the original assessment proceedings u/s 143(3) of the Act, the assessee had not furnished details relating to nature of the prior period expenses and the year in which the liability crystallized besides not furnishing the expenses bills and vouchers and therefore it cannot be said that all material relevant for the assessment had been disclosed fully during the course of original assessment proceedings. 2. On the facts and in the circumstances of the case and in light of the provisions of law the AO was amply justified in making the disallowance of Rs. 12366111/- out of the claims of prior period expenses in the reassessment proceedings." 3. Brief facts of the case are ....
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....referred an appeal before the Ld. CIT appeal. He vide order dated 2/6/2011 deleted the addition on account of prior parade expenses. With respect to the reopening, he did not decide the issue, as the legality and validity of the reassessment are academic in nature, as he has already deleted the main addition. Revenue aggrieved with the same is in appeal before us. 6. With respect to ground No. 1 of the appeal is against the reopening of the assessment. We have carefully produced the order of the Ld. CIT (A) wherein the Ld. CIT appeal has not decided the issue about the reopening of the assessment but has deleted the addition made in the reopened assessment proceedings on merits. As the revenue is not aggrieved with the order of the Ld. C....
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....evision of pay structures etc with retrospective effect. The identical issue arose in the case of the assessee wherein for assessment year 2006 2007 the Ld. CIT appeal has allowed the claim of the assessee relying upon the decision of the Hon'ble Gujarat High Court in case of Saurashtra cement and chemicals industries Ltd versus CIT 213 ITR 523. The Ld. CIT appeal also relied upon his own order for earlier years wherein identical disallowances been deleted. Hon'ble Gujarat High Court in Saurashtra cement & chemical industries Ltd versus CIT 213 ITR 523 has held that:-. "9. Question No. 5 relates to the expenditure of Rs. 39,823 actually incurred during the previous year but was not allowed as deduction from the profit of the previous yea....
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.... case where the accounts are maintained on mercantile basis it has to be found in respect of any claim, whether such liability was crystallized and quantified during the previous year so as required to be adjusted in the books of account of that previous year. If any liability, though relating to the earlier year, depends upon making a demand and its acceptance by the assessee and such liability has been actually claimed and paid in the later previous years, it cannot be disallowed as deduction merely on the basis that the accounts are maintained on mercantile basis and that it related to a transaction of the previous year. The true profits and gains of a previous year are required to be computed for the purpose of determining tax liability....
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....ount of the sales tax liability paid during the year 1957-58, whereas the liability related to the accounting year 1949-50. The Division Bench in that case observed as under: ". . . Under section 4 of the Income-tax Act, the income that accrues or arises during any previous year alone is to be taken note of. There is, therefore, a bar to include any income that accrues or arises outside the previous year subject to the deeming provisions in the Act. There is, however, no express bar in law,. nor one by necessary implication, restricting the power of the Income-tax Officer to exclude the expenditure laid out or expended under section 10(2) (xv) of the 1922 Act. We are, therefore, unable to accede to the submission of the learned counsel f....