Case Law Details
DCIT Vs Adani Wilmar Ltd. (ITAT Ahmedabad)
The issue under consideration is whether the CIT(A) correct in deleting the addition made on account of disallowance of prior period expenses?
In the instant case, the assessee in the year under consideration has claimed an expense under the head prior period item in its profit and loss account. Such prior period item was representing the excise duty with respect to waste i.e. Spent Earth generated during the manufacturing process. The assessee during the assessment proceedings admitted that such expenses pertains to the earlier year but the same is allowable on payment basis under section 43B of the Act. However, the AO disagreed with the contention of the assessee by observing that the assessee was very much aware about such liability in the year of its incurrence. Therefore the assessee should have claimed the deduction of such expenses in the year in which it was crystallized. Accordingly the AO disallowed the claim of the assessee and added the sum to the total income of the assessee.
ITAT states that, there is no ambiguity to the fact that such item of prior period expenses represents the excise duty paid by the assessee in the year under consideration. Similarly, the provisions of section 43B, being overriding section, provides to allow the deduction to the assessee on payment basis with respect to certain items including the excise duty. As the assessee has paid the excise duty, pertaining to the earlier year, in the year under consideration, ITAT are of the view that such payment of excise duty is eligible for deduction in the current year. In view of the above, ITAT do not find any infirmity in the order of the learned CIT (A) and accordingly they decline to interfere in his order. Thus the ground of appeal of the revenue is dismissed.
FULL TEXT OF THE ITAT JUDGEMENT
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