Abhyudaya Housing & Constructions Private Limited Vs ACIT (ITAT Delhi)
Delhi ITAT Allows Prior Period Expenditure on Crystallisation Basis & Upholds Quashing of Reassessment as Mere Change of Opinion
The Delhi ITAT granted relief to the assessee by deleting the disallowance of ₹50 lakh out of prior period/exceptional expenditure of ₹1.49 crore, holding that the liability had crystallised during the relevant previous year. The Tribunal observed that although the assessee followed the mercantile system of accounting, the expenditure had not crystallised in the earlier years and was actually paid on 31 March 2012 pursuant to an agreement. Accordingly, the claim could not be disallowed merely because it related to an earlier period.
The Tribunal also dismissed the Revenue’s appeal against the order quashing the reassessment under sections 147/148. It agreed with the CIT(A) that the reopening was based on a mere change of opinion, as the Assessing Officer had already examined the relevant details during the original scrutiny assessment. Relying on the Supreme Court’s decision in CIT v. Kelvinator of India Ltd., the Tribunal held that the reassessment was invalid.
Accordingly, the assessee’s appeal challenging the disallowance was allowed, its separate appeal against the section 263 order was dismissed as not pressed, and the Revenue’s appeal against the quashing of reassessment was dismissed.
FULL TEXT OF THE ORDER OF ITAT DELHI
