Commissionerof Income Tax; Delhi-Vappellantthroughmr.balbirsingh,Sr.standingcounsel v. Rites Ltd

fy ^ $-^10& 11*IN THE HIGH COURTOF DELHIAT NEW DELHI+ITA Nos. 293/2013& 295/2013 COMMISSIONEROF INCOME TAX; DELHI-VAppellantThroughMr.BalbirSingh,Sr.StandingCounsel. versus RITES LTD. RespondentThroughMr. Manoj Kumar and Mr. J.C.Seth, Advocates CORAM: HON'BLE MR. JUSTICE SANJIV KHANNAHON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW ORDER%06.12.2013 These two appeals filed by the Revenue under Section260A of the Income Tax Act, 1961, pertain to assessment years2006-07 and 2007-08. 2.The issue raised pertainsto expenses,which were shownunderthehead 'prior periodexpenses'in thepapers/statementofaccounts filed before the Assessing Officer.In the assessmentyear 2006-07, the amount involved is Rs.1,37,20,650/-and intheassessment year 2007-08, theamount involved isRs.40,83,640/-.The tribunal in the impugned order hasfollowed their own order dated 20^^ March, 2008 for the assessment year 2002-03.This order of the tribunal was made0subject matter of challenge in ITR 72/2009, but thewasdisposed of on 4^*^ May, 2009 recording that approval fromCommittee on Disputes had not been taken and hence the HighCourt declined to entertain the reference.The appellant has notpointed out whether the Committee on Disputes was in factapproached and whether they had approved or rejected therequest. It is, however, accepted that no application for revivalof ITR 72/2009 was filed.It is also pointed out that similarissues had arisen in the assessment years 2003-04 and 2004-05,but the Revenue did not file any appeal before the ITATquestioningthe findingsrecordedby Commissioner(Appeals)infavour of the respondent-assessee. It is stated that this was forwant of approval from the Committee on Disputes. 3.In the two assessmentyears, the assessee had filed replywhich has been reproducedin the assessmentorders. In the it was mentioned that thewas areply respondent-assesseeGovernmentof India undertakingand they had well recognisedrules or procedures for providing income or liability after was obtainedfrom therequisiteapproval designatedauthority.This practisehad been followeduniformlyin the past and onlyafter the invoices were examinedand found to be correct or in orderbythedesignatedauthority,theyweretreatedascrystallized.The same principle was adopted in respect ofexpensesandincome.Afterreproducingthereply, theAssessing Officer has not mentioned or dealt with the factualmatrix in detail specifically dealing with each individualexpense as claimed.He did not specificallyexamine and go intodetails of each expenses; when invoices were raised, whenapproval was granted and so on and so forth. 4.Commissioner (Appeals) in the appellate order relating toassessment year 2006-07 has recorded the following findings;- "I have gone through the assessment order andsubmission of the appellant.During the course ofhearing of appeal, appellant placed on record adetailed chart in respect of past history of the case,wheretheissueof priorperiodexpenseswasinvolved. DETAILS OF PRIOR PERIOD EXPENSES ALLOWED IN DIFFERENT 4.Commissioner (Appeals) in the appellate order relating toassessment year 2006-07 has recorded the following findings;- "I have gone through the assessment order andsubmission of the appellant.During the course ofhearing of appeal, appellant placed on record adetailed chart in respect of past history of the case,wheretheissueof priorperiodexpenseswasinvolved. DETAILS OF PRIOR PERIOD EXPENSES ALLOWED IN DIFFERENT As per the above said chart, it is noticed that the claim of"prior period expenses " have always been acceptedeither by the CIT (A) or ITAT and in fkct COD approvalwas also not granted to pursue the appeal against order ofthe CIT (A) on the above said issue before ITAT. TheAssessing Officer himself has accepted the above saidposition in the assessment order. It is further noticed thatthe claim of prior period is a regular feature in case of theappellantcompanyandevenotherPublicSectorCompanies as these entities are bound by procedures andrule of governance.As per the office managementsystem, adjustment in respect of income or expenses arebooked only when approval or the requisite authorities isobtained. It is in this context that the issue or prior periodincome or expenses is relevant in all the years in case ofappellant company. Further, under the mercantile systemalso, the liability is required to be allowed as and whencrystallised and issue of period is of no relevance orconsequence. The legal position to this effect is wellsupported from various case laws referred to in thewrittensubmissionasextractedabove.It isfurthernoticed that Assessing Officer has not disputed the claim samegenuineness of the or admissibility of theunderthelaw.Further,accountsof theappellantcompany are audited by the statutoryauditor appointedby the CAG and such auditedaccountsare also approvedby office of CAG. It is not the case of the AssessingOfficer that these statutory authorities have made anyadverse comment in respect of genuinenessof the claimor procedure followedby the appellantcompany. In the light of above discussionand past history of thecase, I am inclinedto acceptthe claim of the appellantas the rule ofand orders ofper consistency by followingCIT (A) and ITATin the precedingyears. In the result, this ground of appellant is allowed anddisallowance of Rs.1,91,33,000/- is deleted. " (Appeals) in the assessment year 2007-08. The aforesaid view has been affirmed by the tribunal. 6.Keeping in view the aforesaid factual matrix as there is hardly any elucidation and the order passed by the Assessing Officer iscryptic, we are not inclined to interfere with the findings recorded bythe tribunal. The appeals are dismissed. Dasti. C KHANNA, J. DECEMBER 06, 2013 NA RAJIV SAHAIENDLAW,J.