Pr. CIT-2, Kolhapur v. Eco Cane Sugar Energy Ltd
[Citation -2019-LL-0227-83]
| Citation | 2019-LL-0227-83 |
|---|---|
| Appellant Name | Pr. CIT-2, Kolhapur |
| Respondent Name | Eco Cane Sugar Energy Ltd. |
| Court | HIGH COURT OF BOMBAY |
| Relevant Act | Income-tax |
| Date of Order | 27/02/2019 |
| Assessment Year | 2010-11 |
| Judgment | View Judgment |
| Keyword Tags | scrutiny assessment proceedings • prior period expenses • claim of expenditure • mercantile system • previous year • additional sugarcane price |
| Bot Summary: | 2 The Revenue has urged only the following question of law for our consideration : Whether on the facts and in the circumstances of the case and in law, the Tribunal was right in allowing the claim of expenditure pertaining to earlier year ignoring the facts as the assessee has been following the mercantile system of accountancy lgc 1 of 4 ::: Uploaded on - 02/03/2019 ::: Downloaded on - 05/03/2019 11:51:42 ::: itxa 1822.16.doc 3 The Respondent Assessee is a public limited company and is engaged in the business of production of sugar from sugarcane. For the subject assessment year, the Assessee filed its returns of income declaring loss of Rs.41,38,497/. During the course of scrutiny assessment proceedings, the Assessing Officer found that Assessee had claimed prior period expenses to the tune of Rs.2,33,30,414/ is attributable to payment of sugarcane price difference paid to the farmers for the earlier assessment year. The Assessee had initially paid to the farmers sugarcane price at Rs.1200/ per MT and thereafter it revised the rate at Rs.1300/ per MT. However, the adjoining sugar factories was purchasing sugarcane from the farmers at Rs.1400/ per MT. In the aforesaid circumstances the sugarcane farmers threatened the assessee to stop the supply/sale of sugarcane to the assessee in the previous year relevant to assessment year 2009 2010, unless they receive the same consideration as other factories had paid for the sugarcane in the earlier year. These payments during the previous year relevant to the assessment year was sought to be claimed as prior period expenses in the subject assessment year. On the above facts, the impugned order of the Tribunal concludes that the expenditure claimed as prior period expenses crystallized of Rs.2,33,30,414/ only during the subject assessment year. These expenses ought to have been accounted for in the earlier year and could not have been claimed as expenses in a subsequent assessment year as is being done in this case. |