TaxTMI 
TaxTMI 
TaxTMI 
2016 (12) TMI 1917
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.... is before us by raising following grounds of appeal: "Ground no.1. (i) The Commissioner of Income tax (Appeals) {hereinafter; referred to as CIT (A)} erred in confirming the disallowance of claim for-deduction u/s 37(1) in respect of revenue expenditure incurred during the year amounting to Rs. 1,05,89,163/-. (ii) The Learned CIT (A) failed to appreciate that the expenditure having been incurred for carrying-on the business and being of revenue nature is eligible for deduction u/s 37(1). (iii) The appellant prays that the deduction of Rs. 1,05,89,163/- as claimed by it be allowed. Ground No.2: i) The Commissioner of Income tax (Appeals) {hereinafter referred to as CIT(A)} erred in confirming the disallowance of claim for deduction u/s 43B(f) in respect of reversal of provision of Leave Encashment during the year amounting to Rs. 36,40,709/-. (ii) The Learned CIT (A) failed to appreciate that the claim of Leave Encashment was already disallowed u/s 43B in the earlier years when originally provision of Leave encashment were made and reversal of such Leave- encashment provision has the effect of reducing current year's expenditure and therefore needs to be excluded f....
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.... of income which was also furnished before the AO. However, the AO did not find the submissions and contentions of the assessee as convincing and substantive on the ground that the expenses were shown under the project development expenditure and it was further shown under the WIP in the Balance sheet and no transfer entries were made in the books of account which proved conclusively that the expenditure were incurred on a project /activity which was not completed during the year and accordingly disallowed and added the same to the income of the assessee. Aggrieved by the order of the AO, the assessee preferred an appeal before the First Appellate Authority who also dismissed the appeal of the assessee on this issue by observing and holding as under : "I find that "Schedule-O"[Notes on Accounts] of the assessee read's as under: "The company is in the process of setting' up various facilities for conducting its business. The expenditure incurred during the implementation period for bringing the project in the condition of its intended use, is treated as "Project Development Expenditure" pending capitalization and included in Capital Work-in-progress. Capitalization is don....
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....ion of income filed before the authorities below. The ld. AR argued that the said expenditure were not incurred either for acquiring capital asset or creating any enduring benefit and therefore finding of the facts by the authorities below were incorrect and wrong. The ld. AR submitted that for claiming any expenses of revenue in nature the mode of entries or treatment of the said expenditure in the books of account were not material for allowing the deduction while computing the income of the assessee. The ld. AR finally submitted that the issue was covered in favour of the assessee by the decision of co-ordinate Bench of the Tribunal in the case of assessee's sister concern in M/s Reliance Footprint Ltd V/s ACIT in ITA No.5997/Mum/2011 (AY-2008-09) dated 23.10.2013. The ld. AR submitted that in view of the ratio laid down in the above mentioned decision of the Tribunal the ground should be decided in favour of the assessee by allowing the appeal of the assessee. 6. The ld. DR on the other hand while opposing the contention of the ld. AR submitted that the expenditure by the assessee were of capital nature as substantiated by the manner of treatment and accounting in the books of....
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....as "capital" in books of account and as "revenue" for Income tax purposes. However, such view of the AO can not be upheld in view of the decision of Hon'ble Supreme Court in the case of Kedarnath Jute Mfg. Company Ltd. (supra) wherein it has been held that the issue that whether the assessee is entitled to a particular deduction will depend upon the provisions of law relating thereto and not on the view which the assessee might take of his rights; nor can the existence or absence of entries in his books of account be decisive or conclusive in the matter. 6.1 From the submissions made by the assessee before the AO it is also clear that opening of stores at various places was one composite business of the assessee and in that course the assessee had started operation of its stores at Bangalore and Hyderabad. It was the contention of the assessee that operations of these stores at various locations is one composite business and once business had been started then the expenditure can not be linked only to the stores which became operational during the year under consideration. Such submission of the assessee has not been controverted by the AO. All these details were submitted be....
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....im describing also that how much TDS has been deducted. For example job description is described as sourcing product design and development; sourcing and procurement; category management; marketing communication, marketing consumer behaviors; distribution and logistic; sourcing and procuring; talent acquisition buyer etc. etc. In the note which has been filed along with the details it is clearly mentioned that the assessee has employed these persons for carrying out market research work such as to contact various manufacturers and suppliers of the footwear and other accessories; getting base price and delivery schedules as well as comparing the products of various manufacturers of unbranded products with the price and quality of branded products, preparing various reports for this purpose, planning, distribution and logistic, sourcing, designing products, inventory planning discussing consumer preferences for various product range etc. The submissions made by the assessee before Ld. CIT(A) matches with the job description of all the employees. Therefore, it cannot be said that assessee did not provide the necessary details. By furnishing these details, the assessee had placed on re....
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....d to tax for the reason that the provisions for leave encashment was not claimed as deduction in the earlier year at the time of creation. Accordingly the reversal thereof has been reduced from the income. The AO found that the contention of the assessee was not acceptable as the deduction under section 43B in respect of leave encashment of was allowable on actual payment basis and accordingly added the same to the income of the assessee. Aggrieved by the order of the AO, the assessee preferred an appeal before the ld. CIT(A) who also dismissed the appeal of the assessee by observing and holding as under : "Section 43B opens with a non-obstante clause which means that irrespective of other provisions, section 43B will have overriding effect. The intension of the legislature is to allow deduction in respect of the kinds of liabilities referred to in the section in computing income u/s. 28 only in that previous year in which such sum is actually paid by the assessee. The intention is made more specific by providing that it would be so irrespective of the previous year in which the liability to pay such sum was incurred by the assessee according to the method of accounting regularly ....