PCIT v. Rajesh Prakash Timblo (2019) 415 ITR 334 / (2020) 185 DTR 34 (Bom)(HC)

S. 37(1): Business expenditure —Year of allowability of expenditure – Method of accounting – Rate of tax is same in both assessment years — Question academic — No question of law. [S.145, 260A]

In this case the assessee entered into an agreement in FY 2009-10 with a company to pay liquidated damages to said company for cancellation of contract in three installments, and last installment was paid in FY 2010-11, deduction in respect entire amount of liquidated damages paid by assessee was to be allowed in assessment year 2011-12.

Also Court held that the highest rate of Income-tax attracted to both the assessee was uniform for the assessment years 2010-11 and 2011-12. Since the rate of Income-tax in the assessment years 2010-11 and 2011-12 was uniform, it was of no consequence to the Revenue whether to allow the expenditure in the assessment year 2010-11 or 2011-12. No question of law.

Followed CIT v Nagri Mills Co Ltd. (1958) 33 ITR 681 (Bom) (HC), CIT v. Aditya Builders Ltd (2015) 378 ITR 75 (Bom)(HC), CIT v Triveni Engineering and Industries Ltd ( 2011) 336 ITR 374 ( Delhi) (HC) CIT v. Gujarat State Forest Development ( 2007) 288 ITR 28 (Guj) (HC) ( AY. 2011-12-2012-13)

Tags: Judgement, Income Tax, High Court