Prasandi Infotech Park P. Ltd. Vs ACIT (ITAT Delhi)
ITAT Delhi held that interest expense relating to prior period expenditure is allowable since from the financial positions and profitability declared in the financial statement, it shows that it has no tax effect. Thus, appeal allowed.
Facts- The case of the assessee was selected for scrutiny assessment. Post completion of assessment, AO disallowed prior period expense to the tune of Rs. 33,65,13,449/-. CIT(A) dismissed the appeal. Being aggrieved, the present appeal is filed.
Conclusion- Held that assessee has declared loss of Rs.27.82 crores in AY 2015-16, loss of Rs.61.18 crores in AY 2016-17 and in current assessment year, before considering the exceptional item of interest claimed by the assessee, the loss declared was Rs.23.49 crores. From the above, it is clear that even the assessee may have claimed the above interest loss would have been increased and assessee would have carried forward the loss. From the financial positions and profitability declared in the financial statement, it shows that it has no tax effect. The lower authorities argued that assessee has followed the mercantile system and assessee should have booked the relevant information in the relevant financial year, however there would not be any tax impact even assessee could have claimed the relevant expenditure in the relevant assessment year.
