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Dy. CIT Circle-11(1), 11, New Delhi. Vs. M/s. Escorts Assets Management (P) Ltd. Scindia House, Connaught Circle, New Delhi 110 001.
March, 05th 2015
                      IN THE INCOME TAX APPELLATE TRIBUNAL
                          DELHI BENCHES : "B" NEW DELHI

                    BEFORE SHRI G.C. GUPTA, VICE PRESIDENT
                   AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER

                                   ITA No: 5767/Del/2011
                                       AY : - 2003-04

Dy. CIT                       vs. M/s. Escorts Assets Management (P) Ltd.
Circle-11(1),                     11, Scindia House, Connaught Circle,
New Delhi.                        New Delhi ­ 110 001.
                                   (PAN AAACE2671E)

(Appellant)                                  (Respondent)
                        Appellant by    : Smt. Parwinder Kaur, Sr. DR
                        Respondent by :Shri R.M. Mehta, Advocate
                        Date of hearing :16.2.2015
                Date of pronouncement :4.3.2015
                                ORDER

PER G.C. GUPTA, VICE PRESIDENT

       This is an appeal filed by the revenue for the assessment year 2003-04 is

directed against the order of the Ld. CIT(A). Ground No. 1 of the appeal of the

revenue is as under :-


     1. "On the facts and circumstance of the case and in law, the Ld. CIT(A) has
        erred in deleing the addition of Rs. 12,35,472/- made on account of
        disallowance of deferred revenue expenditure."


2.        Ld. DR submitted that the assessee has not given effect to the last year

addition of Rs. 994298/-( Rs. 21,82,298/- - Rs. 11,88,000/- being depreciation

allowed) under the head " deferred revenue expenditure" disallowed in the

assessment year 2002-03. She submitted that the deferred revenue expenditure

should have only Rs. 20,91,155/- whereas the assessee has shown the same at Rs.

33,26,627/- and therefore the addition made was justified. She relied on the order of

the AO. The Ld. Counsel for the assessee has opposed the submissions of the Ld.
                                                          ITA No. 5767/Del/2011
                                      DCIT vs. Escorts Assets Management (P) Ltd.




DR. He submitted that the amount charged to the P & L account has been duly

added back to the income as is evident from the computation of income of the

assessee , copy filed in the compilation before the Tribunal. He submitted that

therefore there was no case for making any disallowance on account of deferred

revenue expenditure    when the assessee has not claimed any such amount as

deduction during the relevant assessment year 2003-04. He submitted that the sum

of Rs.6,42,598/- in the nature of deferred revenue charged to be expenditure in the

P & L account has been suo moto written back in the statement of computation of

income and is included under the head `miscellaneous expenses' of Rs. 10,80,773/- ,

which has been added back.


3.       We have considered the rival submissions and have perused the order of

the AO and also the copies of documents filed in the compilation before us. We find

that assessee is an asset management company which manages the assets of

Escorts Mutual Fund. We find that the assessee has debited a sum of Rs.

10,80,773/- to the P & L account under the head `Administrative and other

expenses'- Schedule K and this amount includes deferred revenue expenditure

written off to the extent of Rs. 6,42,598/- out of the deferred revenue expenditure

of the earlier years. The amount charged to the P & L account has been duly added

back to the income as is evident from the computation of income of the assessee for

the asst. Year 2003-04, copy of which has been filed at page 4 of the compilation

filed before us. In these facts we find that there could not be any case for making

any disallowance of account of deferred revenue expenditure when the assessee had

not claimed any such amount as deduction during the asstt. year 2003-04. A sum of

Rs. 6,42,598/- in the nature of deferred revenue charged to the expenditure in the



                                                                                      2
                                                              ITA No. 5767/Del/2011
                                          DCIT vs. Escorts Assets Management (P) Ltd.

P & L account has been suo motto written back in the statement of computation of

income by the assessee. It is included in the miscellaneous expenses of Rs.

10,80,773/- which has been added back. The CIT(A) has given a finding that the P &

L account and accompanying schedules do not reflect any other deferred revenue

expenditures. In these facts of the case we are of the considered view that there

was no basis for making disallowance of deferred revenue expenditure of Rs.

12,35,472/- and the disallowance was rightly deleted by the CIT(A). In this view of

the matter the order of the CIT(A) on this issue is confirmed and the ground no. 1 of

the appeal of the revenue is dismissed.


4.       Ground No. 2 of the revenue is as under :-

     2. "On the facts and circumstances of the case and in law, the Ld. CIT(A) has
        erred in deleting the addition of Rs. 69,158/- made on account of disallowance
        of expenses pertaining to prior period."
4.1         The Ld. DR submitted that the expenditure pertains to earlier assessment

years and was not ascertained liability for the assessment year 2003-04 and

therefore was rightly disallowed by the AO. She relied on the order of the AO. The

Ld. Counsel for the assesee has relied the order of the CIT(A)


5.          We have considered the rival submissions and perused the material on

record. We find that although the bills for certain expenditure pertains to the

previous assessment year but were settled in period relevant to the assessment year

2003-04 and the expenditure was fully verified and relates to the business

operations of the assessee and therefore was allowable in the asstt. year 2003-04.

The CIT(A) has given a finding that the bills in dispute relates to travelling,

entertainment claim of employees as also the full and final settlement of the

employees and that as the liability was ascertained after verification in the asstt year



                                                                                           3
                                                               ITA No. 5767/Del/2011
                                           DCIT vs. Escorts Assets Management (P) Ltd.

2003-04 and the expenditure was admissible for deduction in asstt. year 2003-04.

There being no mistake in the order of the CIT(A) the same is confirmed and the

ground no. 2 of the appeal of the revenue is dismissed.


6.     Ground No. 3 and 4 of the revenue are as under :-


     3. "On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in
        deleting the addition of Rs. 5,46,251/- made on account of provision for expenses.

     4. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in
        deleting the addition of Rs. 5,46,251/- made on account of adjustment made of
        provision for expenses while computing book profit u/s 115JB of the I.T. Act."


6.1       The Ld. DR submitted that the expenditure was merely provision for

ascertained liabilities and the assessee could not file the necessary details before the

AO. She submitted that the expenditure was incurred by the group company and

not by the assessee itself and assessee could not prove that it was incurred for

business purposes only. She relied on the order of the AO. The Ld. Counsel for the

assessee submitted that the identical disallowance made in the earlier assessment

year 2002-03 was deleted by the CIT(A) and there was no further appeal to the

Tribunal. The expenditure was made for ascertained liabilities and therefore

allowable. He submitted that even the amount is added in assessment u/s 143(3), it

could not be under provision of 115JB while computing the book profit of the

assessee and the issue is covered in favour of the assessee with the decision of

Special Bench of the Tribunal in the case of Joint Commissioner of Income Tax vs.

Usha Martin Industries Ltd. 288 ITR (AT) 63 (Kolkata) (SB). He relied on the order of

the CIT(A) .







                                                                                              4
                                                           ITA No. 5767/Del/2011
                                       DCIT vs. Escorts Assets Management (P) Ltd.

7.        We have considered the rival submissions and perused the material on

record. We find that the submission that identical disallowance made by the AO in

immediately preceding assessment year 2002-03 was deleted by the CIT(A) and

there was no appeal by the revenue to the Tribunal, has not been controverted.

We find that the provision was made for expenditure in the form of repairs,

electricity expenses, travelling and other office expenses which are ascertained

liabilities. The CIT(A) has recorded in his order that the copy of the bills of the

expenses filed before the AO were filed before him and the relevant bills have been

raised between 1.4.2002 to 31.3.2003 the CIT(A) has given a finding that the

expenditure is specific in nature and the term provision for expenses appears to be a

mere misnomer. We find that the expenditure incurred was for business purposes

only and no case for disallowance could be made out by the revenue. With regard to

the adjustment made u/s 115JB of the Act we find that since the provision of Rs.

5,46,251/- was not in relation to contingent liabilities and since the expenditure for

which the provision was created was fully ascertained, the adjustment                of Rs.

5,46,251/- under the provision of 115JB was not justified. In this view of the matter

the order of the CIT(A) was issued is confirmed and the ground no. 3 and 4 of the

appeal of the revenue are dismissed.


8.   In the result the appeal of the revenue is dismissed.


     Order pronounced in the Open Court on 4th March, 2015.

              Sd/-                                    Sd/-

        (T.S. KAPOOR)                             (G.C. GUPTA)
    ACCOUNTANT MEMBER                           VICE PRESIDENT
Dated: the            2015
*veena



                                                                                              5
                                                                 ITA No. 5767/Del/2011
                                             DCIT vs. Escorts Assets Management (P) Ltd.

Copy of the Order forwarded to:

1.    Appellant
2.    Respondent
3.    CIT
4.    CIT(A)
5.    DR
6.    Guard File
                                                                  By Order
                                                                 Dy. Registrar




Sl.                  Description                        Date
No.

 1.   Date of dictation by the Author                16.2.2015

 2.   Draft placed before the Dictating Member       16.2.2015

 3.   Draft placed before the Second Member

 4.   Draft approved by the Second Member

 5.   Date of approved order comes to the Sr.
      PS

 6.   Date of pronouncement of order

 7.   Date of file sent to the Bench Clerk

 8.   Date on which file goes to the Head Clerk

 9.   Date of dispatch of order




                                                                                           6

 
 
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