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Judgment
This appeal was admitted on 16th July, 2007, on the following
substantial questions of law:-
(I) Whether on the facts and in the circumstances
of the case, the Income Tax Appellate Tribunal was legally
justified in confirming disallowance made by Assessing
Officer at Rs. 2,31,71,040/- as prior period expenses and
also not accepting the alternate prayer for allowing the
deduction in the years to which the same relate as per
Assessing Officer?
(II) Whether Income Tax Appellate Tribunal was
legally justified in confirming disallowance made by
Assessing Officer in respect of claim of appellant for
depreciation amounting to Rs. 5,50,908/- pertaining to
assets transferred upon amalgamation in the earlier year
(Assessment Year 1992-1993) from the amalgamating
company, viz. Modern Stramit (I) Ltd. a company
amalgamated by virtue of the order of the BIFR?
(III) Whether Income Tax Appellate Tribunal was
legally justified in confirming disallowance made by
Assessing Officer at Rs. 66,000/- as share issue expenses
which includes placement fees which are revenue in nature
and allowable under Section 37 of Income Tax Act, 1961?
Shri Dewani, learned counsel appearing for the appellant
submits that the substantial questions of law at Sr. Nos. 2 and 3 are
covered against the assessee in ITL NO. 100/2004 decided by this Court
on 08.09.2017. In view of this, the substantial questions of law at Sr. No.
2 and 3 do not survive.
So far as the substantial question of law at Sr. No.1 is
concerned, the Assessee claims expenses of Rs. 2,31,71,040/- during the
assessment year 1998-199 though actually the expenses pertain to
earlier assessment year. The claim is that the amount was actually paid
in the assessment year 1998-1999 and some expenses made during the
previous year but not claimed.
Shri S. N. Bhattad, learned counsel appearing for the
Department has invited our attention to each provision of Section 43(B)
of the Income Tax Act which has been relied upon by the Appellate
Tribunal to answer the question against the Assessee and has urged that
the amount pertaining to the statutory expenses has to be claimed in the
year in which such expenses are actually required to be incurred or
actually to be paid. According to him, the expenses in question are
covered by Section 43(B) and should have been therefore, claimed in the
previous year in which actually paid prior to 1998-1999.
We put a specific question to Shri Bhattad to point out any
decision holding that if the statutory expenses covered by Section 43(B)
are not actually paid during the year in which those are required to be
paid then even if such expenses are actually paid in the subsequent year,
the deduction can not be claimed. No such decision is brought to our
notice. If the expenses are covered by Section 43(B), there cannot be
disputed about its claim for deduction and merely because the deduction
was not claimed in the previous year, it would not prevent the assessee
from claiming it in the assessment year during which the payment was
actually made. The substantial question of law we therefore, answered
accordingly.
In view of above, the questions have been answered in
favour of assessee. Appeal is required to be partly allowed and
disallowance of Rs. 2,31,71,040/- is set aside and the same is allowed as
expenditure actually incurred.