TaxTMI 
TaxTMI 
2025 (4) TMI 1992
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.... having duly explained the reason as to why the expenditure was being claimed during this year and not during the earlier years, the CIT(A) grossly erred in failing to consider the same and in merely upholding the disallowance made by the AO. 4. The expenses incurred for the Russian project which stood abandoned, being allowable u/s.37 of the Act, the CIT(A) grossly erred in upholding the disallowance made by the AO. Any other ground raised at the time of the hearing. 3. The brief facts are that the assessee is a public limited company engaged in manufacturing and export of egg powder and poultry farm. The assessee initially filed its return of income for the assessment year 2013-14 on 29.09.2013 and subsequently, filed revised return on 04.10.2014 admitting 'nil' income after setting off brought forward losses and unabsorbed depreciation as per normal provisions as well as the MAT provisions of the Income Tax Act, 1961 (hereinafter the 'Act'). The case was selected for scrutiny under CASS. Notice u/s.143(2) & 142(1) of the Act along with questionnaire was issued. In response, the assessee filed reply and written submissions. After considering the assessee's co....
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....which was not claimed in the earlier years, by invocation of the provisions of section 37 of the Act, which is not allowable. Thus, this ground raised by the appellant is dismissed." Aggrieved by the impugned order of the ld.CIT(A), the assessee is in appeal before us. 5. The Ld.AR for the assessee submitted that during the F.Y.2012-13, due to various unfavourable conditions, the assessee's expansion of business by setting up a branch got delayed and did not fructify. Thus, the assessee decided to write-off the expenses incurred during the F.Ys.2008-09 to 2011-12 during current assessment year. The assessee had not claimed these expenses in the years in which the same were incurred for the reason that the assessee was of the idea that the expenses can be capitalized and amortized as per section 35D of the Act, after the business unit in Russia was set-up and commenced operations. However, since the same did not materialize, the assessee wrote-off the expenses during this year. 5.1 The Ld.AR further submitted that the AO had disallowed the assessee's claim and added back the expenditure to the assessee's income for the reasons that; a. The appellant has not explain....
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.... in the case of CIT Vs. Shri Ram Pistons & Rings Ltd. [2008] 220 CTR 404 (Delhi) wherein it was held as under: "18. In the reference that is before us there is no doubt that the assessee had incurred an expenditure. The only dispute is regarding the date on which the liability had crystallized. It appears that there was no change in the rate of tax for the assessment year 1983-84 with which we are concerned. The question, therefore, is only with regard to the year of deduction and it is a pity that all of us have to expend so much time and energy only to determine the year of taxability of the amount." 5.5 The Ld.AR stated that both the AO and the CIT(A) duly agree that the expenses so incurred by the assessee were revenue in nature. The only dispute is the year in which the same are to be allowed. The assessee had demonstrated in its submissions before the AO and the CIT(A) as to why the same could not be claimed in the respective years. The expenses have thus crystallized only during this year. The expenses incurred being revenue in nature and allowable, the same are to be allowed u/s.37 of the Act during this year and the disallowance of expenditure by the AO is to b....
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....&L account during the impugned assessment year since the assessee decided to windup the setting up of a branch at Russia due to various unfavourable business conditions. Since the AO and the Ld.CIT(A) have not disputed the fact that the expenditures have been spent by the assessee during those years and not claimed as revenue expenditure in the respective assessment years, in our considered view, these expenses have been crystalized during the impugned assessment year due to discontinuation of expansion of opening a branch at Russia. Therefore, the same has been claimed as an expenditure in the impugned assessment year, which is an allowable expenditure u/s.37 of the Act. 7.1 It is further pertinent to note that reliance of assessee in its own case in ITA No.3431/CHNY/2016 for the assessment year 201112, in respect of claim of expenditure of earlier assessment years during the assessment year 2011-12 on account of reimbursement of expenses to its subsidiary has been decided in favour of assessee by this Tribunal by observing as under:- "Therefore, we are of the considered view that once any particular expenditure is crystallized during relevant accounting period, the sa....