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| The Tax Publishers2019 TaxPub(DT) 0641 (Kol-Trib) INCOME TAX ACT, 1961
Section 37(1)
As deferred revenue expenses claimed in earlier years stood allowed and there was no material change in facts of case nor view taken in the earlier year was patently erroneous, therefore, AO was not justified in disallowing the claim of 1/5th of total deferred revenue expenses during the year under consideration.
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Business expenditure - Deferred revenue expenses - No change in facts of case as compared to earlier years -
Assessee acquired technical know-how for increasing its business performance and claimed the said expenses as deferred revenue in nature and accordingly claimed 1/5th of said expenses as deductible. AO disallowed deduction.Held: It was not the case of AO that expenses in question were capital in nature or otherwise not allowable. Further, year under consideration was not the first year in which deduction in respect of 1/5th of deferred revenue expenses had been claimed. Similar claim was made in earlier years and was allowed byAO. While it is true that principle of res judicata does not strictly apply in income tax assessment, however, principle of consistency is nevertheless important and since there was no material change in facts of case nor view taken in the earlier year was patently erroneous, therefore, AO was not justified in disallowing the claim of 1/5th of total deferred revenue expenses.
Relied:11 Madras Industrial Investment Corporation v. CIT (1997) 225 ITR 802 (SC) : 1997 TaxPub(DT) 1209 (SC) and Amtrex Appliances Ltd. (2005) 94 TTJ 396 (Ahd-Trib) : 2005 TaxPub(DT) 98 (Ahd-Trib) and Radhasoami Satsang v. CIT (1992) 193 ITR 321 (SC) : 1992 TaxPub(DT) 858 (SC).
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2004-05
INCOME TAX ACT, 1961
Section 72
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