Case Law Details
ACIT Vs Maharashtra State Electricity Transmission Company Ltd (ITAT Mumbai)
As assessee is following mercantile system of accounting, liability which has arisen during the year under consideration is allowable even though the same may have to be discharged at a future date.
Facts-
The assessee is one of the successor companies to the erstwhile Maharashtra State Electricity Board (MSEB). On the demerger, the assets of MSEB to the extent it pertained and were specifically allocable to the transmission undertaking and were transferred to the assessee. Similarly, liabilities of MSEB to the extent they pertained to/were directly relatable to the transmission undertaking were transferred to the assessee. Accordingly, the sum of Rs.8.80 lakh being legal and professional fees, though pertaining to the erstwhile MSEB was debited to the Profit & Loss Account of the assessee on the basis of the apportioned brought forward losses and unabsorbed depreciation. The professional fees invoices dated 31/03/2010 were raised by the assessee’s Tax Consultant i.e., M/s. P.C. Hansotia & Co., for various professional services rendered by it in representing the erstwhile MSEB before various appellate authorities. The Assessing Officer passed order u/s. 143(3) on the basis of the Comptroller and Auditor General (CAG) report u/s. 619(4) of the Companies Act, 1961 made the addition of the aforesaid legal and professional charges by treating the same to be prior period expenses.
The CIT allowed the appeal filed by the assessee on this issue. Being aggrieved, the Revenue is in appeal before the Tribunal.
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