Case Law Details
Dakshin Haryana Bijli Vitran Nigam Ltd. Vs ACIT (ITAT Delhi)
The issue under consideration is whether AO is correct in disallowing the prior period expense debited to Profit and Loss Account?
In the present case, the assessee credited a net balance of Rs.31,36,65,890/- in the profit and loss account after setting off a prior period expense of Rs.21,210/- from prior period income of Rs.31,36,87,100/- which was due to the arrears of salary of the employees. It is submitted on behalf of assessee that the same accounting treatment for prior period expenses has been given by the assessee quite for a long time and during the assessment year 2010-11, they have claimed the expenses relating to prior period.
ITAT states that, the gross prior period income of Rs.31,36,87,100/- and prior period expenses of Rs.21,210/- were crystallized during the year and therefore, disclosed by the assessee in the balance sheet and profit and loss account. According to ITAT, the claim of assessee on account of Pay anomaly of employee crystallized during the year should have been accepted and he, therefore, granted relief to the assessee. Further, they observed that in the order dated 24.12.2009 for assessment year 2006-07 in assessee’s own case, the Tribunal decided that the liability crystallized during the year has to be allowed. Hence, now they do not find anything improper in the approach of the CIT(A) to allow the expenses in respect of which the liability crystallized during the year.
Therefore, Appeal filed by the revenue dismissed.
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