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Tax Publishers Nortel Networks India (P) Ltd. v. Addl. CIT [ITA No. 5205/Del/2017, dt. 31-8-2020] : 2020 TaxPub(DT) 3415 (Del.-Trib.) Claim of prior-period expenses in current assessment year alleging claim not made in earlier assessment year on a belated return with certain evidences being controverted *Facts:* Assessee had globally filed for bankruptcy protection and was winding up their business. There were certain AMC commitments on existing contracts which got hived to a buyer of the assessee's business. Arising out of this AMC covenant Rs. 33.92 crores had to be paid to a third party. In assessment year 2012-13 the said agreement for paying this Rs. 33.92 crores was made with the third party the timing got extended and finally confirmed in May, 2012 by a finally signed agreement. A Provision was made by assessee for Rs. 33.92 crores in the F.Y. 2011-12/A.Y. 2012-13. The return for assessment year 2012-13 was a belated return with claim of business losses and unabsorbed depreciation made by the assessee along side which they also claimed Rs. 33.92 crores as a deduction initially as well. Since the return was belated their claim of carry forward of business losses lapsed but the claim of unabsorbed depreciation alone stood allowed. In their assessment proceedings of assessment year 2012-13 the assessee initially though claimed the Rs. 33.92 crore deduction retracted the claim saying that this was not applicable for this assessment year and it was applicable only for the next assessment year. The said order of assessment year 2012-13 also went thru Commissioner (Appeals) where a brief mention of Rs. 33.92 made with no point on its allowability/disallowance being spoken about. This order of assessment year 2012-13 also was subject to an appeal by ITAT. Based on this the assessee pleaded that they be allowed the Rs. 33.92 crores deduction in the assessment year 2013-14 also because the agreement attained finality to pay this only in May, 2012. The revenue argued that this was a prior year expense and it was an after thought that it was being claimed in assessment year 2013-14 when the provision etc. all was made and that the return was filed belated would have meant this amount would have also not been allowed or lost in the part of the lapsed carry forward of business losses of assessment year 2012-13. This was decided in favour of the revenue at first appellate level to which assessee went in appeal to ITAT - Held against the assessee that the said expenditure was a prior period expenditure and it got crystallized in assessment year 2012-13 thus does not deserve any deduction in assessment year 2013-14. *Editorial Note:* Reference be made to Addl. CIT v. Nortel Networks India (P) Ltd. [ITA No. 504/Del/2017, dt. 23-7-2020] : 2020 TaxPub(DT) 2952 (Del.-Trib.) for a conjoined reading with this verdict.

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Nortel Networks India (P) Ltd. v. Addl. CIT [ITA No. 5205/Del/2017, dt. 31-8-2020] : 2020 TaxPub(DT) 3415 (Del.-Trib.)

Claim of prior-period expenses in current assessment year alleging claim not made in earlier assessment year on a belated return with certain evidences being controverted

Facts:

Assessee had globally filed for bankruptcy protection and was winding up their business. There were certain AMC commitments on existing contracts which got hived to a buyer of the assessee's business. Arising out of this AMC covenant Rs. 33.92 crores had to be paid to a third party. In assessment year 2012-13 the said agreement for paying this Rs. 33.92 crores was made with the third party the timing got extended and finally confirmed in May, 2012 by a finally signed agreement. A Provision was made by assessee for Rs. 33.92 crores in the F.Y. 2011-12/A.Y. 2012-13. The return for assessment year 2012-13 was a belated return with claim of business losses and unabsorbed depreciation made by the assessee along side which they also claimed Rs. 33.92 crores as a deduction initially as well. Since the return was belated their claim of carry forward of business losses lapsed but the claim of unabsorbed depreciation alone stood allowed. In their assessment proceedings of assessment year 2012-13 the assessee initially though claimed the Rs. 33.92 crore deduction retracted the claim saying that this was not applicable for this assessment year and it was applicable only for the next assessment year. The said order of assessment year 2012-13 also went thru Commissioner (Appeals) where a brief mention of Rs. 33.92 made with no point on its allowability/disallowance being spoken about. This order of assessment year 2012-13 also was subject to an appeal by ITAT. Based on this the assessee pleaded that they be allowed the Rs. 33.92 crores deduction in the assessment year 2013-14 also because the agreement attained finality to pay this only in May, 2012. The revenue argued that this was a prior year expense and it was an after thought that it was being claimed in assessment year 2013-14 when the provision etc. all was made and that the return was filed belated would have meant this amount would have also not been allowed or lost in the part of the lapsed carry forward of business losses of assessment year 2012-13. This was decided in favour of the revenue at first appellate level to which assessee went in appeal to ITAT -

Held against the assessee that the said expenditure was a prior period expenditure and it got crystallized in assessment year 2012-13 thus does not deserve any deduction in assessment year 2013-14.

Editorial Note: Reference be made to Addl. CIT v. Nortel Networks India (P) Ltd. [ITA No. 504/Del/2017, dt. 23-7-2020] : 2020 TaxPub(DT) 2952 (Del.-Trib.) for a conjoined reading with this verdict.