Appellate Tribunal : Power of

Last updated: 02 February 2009

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Court :
Delhi High Court

Brief :
The Tribunal has power to allow claim for deduction which was not made in the return of income : Assessee claimed 1/5th revenue expenditure on deferred basis: Tribunal can allow full revenue expenditure on accrual basis.

Citation :
CIT v. Jai Parabolic Springs Ltd. 172 Taxman 258 (Del.)

For the A.Y. 1990-91, the assessee had written off in the books certain revenue expenditure over a period of 5 years from the relevant assessment year and, accordingly, the assessee claimed deduction of 1/5th of the expenses in the relevant year on deferred basis. The claim was allowed by the AO. In appeal, the CIT(A) allowed the claim for deduction of the entire revenue expenditure in the relevant year. The Tribunal restored the matter to the AO to consider the issue afresh. The AO again disallowed the claim holding that the same was not claimed in the return of income. The CIT(A) allowed the claim. The Tribunal upheld the order of the CIT(A). In appeal before the High Court, the Revenue contended that the Tribunal was not right, in law, in allowing the deduction when no such claim was made in the return of income. The Delhi High Court dismissed the appeal filed by the Revenue and held as under : "(i) The revenue expenditure, which is incurred wholly and exclusively for the purpose of business, must be allowed in its entirety in the year in which it is incurred. It cannot be spread over a number of years even if the assessee has written it off in his books over a period of a number of years. (ii) There is no prohibition on the powers of the Tribunal to entertain an additional ground which according to the Tribunal arises in the matter for the just decision of the case. Therefore, there was no infirmity in the order of the Tribunal."