Case Law Details
PCIT Vs Balmer Lawrie And Company Limited (Calcutta High Court)
The Division bench of Calcutta High Court in this case was considering department’s appeal whether any substantial question of law arose when the assessee had claimed Rs 4.08 crore as prior period expenditure on account of same having crystallised during the year though it related to earlier years and also claimed diminution in the value of investment amounting to Rs 11.82 crores u/s 115JB of the Act on account of investment in a company which turned sick.
Reliance placed on the decision of the Hon’ble Supreme Court in Nonsuch Tea Estate Limited Versus Commissioner of Income Tax [1975] 98 ITR 189 (SC) and the decision of this court in Commissioner of Income Tax Versus West Chusick Coal Company Limited 129 ITR 62 Cal.
Reliance was also placed on the decision of the High Court of Delhi in Commissioner of Income Tax Versus Exxon Mobil Lubricants Private Limited [2010] 8 taxmann.com 249 (Delhi) wherein it was held that where liability of the assesses arose and was crystallized in the current year, the assessee was entitled to allowance of that expenditure only in the current assessment year.
Further by referring to Section 145 of the Act, the assessee submitted that the said provision is a mandatory provision which compels the department to accept the system or method of accounting regularly employed by the assessee for ascertaining the profits from the business or profession carried on by him or the income from other source subject to its being the proper method of reflecting the true or correct profits. After referring to the item No. 7 of Accounting Standards- II (AS II), it was stated that the statute itself prescribes the manner of disclosure of expenses relating to prior period, which arises in the previous year as a separate item.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
Author Bio
