Disallowance of net prior period expenditure debited under ‘prior period expenses’ unsustainable

Maharashtra State Electricity Distribution Company Ltd Vs ACIT (ITAT Mumbai)

ITAT Mumbai held that disallowance of net prior period expenditure debited under the head ‘prior period expenses’ unsustainable as expenditure duly allowed in earlier years by the Tribunal.

Facts- The assessee company was engaged in the business of distribution of electricity in the State of Maharashtra. The assessee’s case was selected for scrutiny and notice u/s. 143(2) and 142(1) of the Act were issued and served upon the assessee. A.O. then passed the assessment order dated 29.03.2015 determining the total income at Rs.323,64,17,918/- by making various additions/disallowances.

Aggrieved, the assessee was in appeal before the ld. CIT(A) who had partly allowed the appeal filed by the assessee.

Appellant has preferred the present appeal challenging the order of CIT(A) in upholding the disallowance of net prior period expenditure debited under the head ‘prior period expenses’ made by the A.O. on the ground that the assessee has failed to furnish the evidences to substantiate that the prior period expenses claimed by the assessee has crystallized during the impugned year.

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