ACIT Vs Vijay Electricals Ltd. (ITAT Hyderabad)
ITAT Hyderabad held that CIT(A) without examining the historical/ empirical data of expenditure incurred by the assessee for rectification / repair of transformers cannot approve the provision thereof. Accordingly, matter remanded back to CIT(A).
Facts- Case of the assessee was re-opened by AO on the ground that the assessee has incurred the expenditure of Rs.5,49,96,134/- towards the repair and rectification of transformer and the amount spent/expenditure incurred was adjusted against the provision of earlier years to the tune of Rs.53,08,754/-. However, the expenditure over and above i.e. 3,96,87,384/-along with the provision for the current year for Rs.3,97,33,809/- was debited to Profit and Loss account. Accordingly, AO disallowed the excess claim of expenditure of Rs. 39687384/- towards rectification expenses.
CIT(A) granted partial relief to the assessee. Being aggrieved, revenue has preferred the present appeal.
Conclusion- The question which has not been answered by the learned CIT (A) is that whether the adjustment of the actual expenditure is required to be made against the provisions for the earlier years or for the current year ? As this issue has not been adjudicated by the ld.CIT(A), therefore, we deem it proper to remand the issue back to the file of the learned CIT (A) with a direction to re-adjudicate the issue. At this stage, we may like to point out that the decision of the Tribunal was on different facts of the case and is not applicable to the facts of the case in hand. Accordingly, the appeal filed by the Revenue and the Cross Objection filed by the assessee are treated as allowed for statistical purposes.
