| Case ID |
42a0ce79-fe86-4b69-abd7-db34c942b156 |
| Body |
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| Case Number |
D-2741 of 2011 |
| Decision Date |
Dec 01, 2011 |
| Hearing Date |
Nov 15, 2011 |
| Decision |
The appeal was dismissed as the expenditure incurred by the assessee on the project was admissible deduction, and the only dispute was regarding the year of allowability of expenditure. The Tribunal's decision to allow the provision for foreseeable losses for projects substantially completed was upheld as it aligned with the principles of matching costs with revenue and did not affect the overall tax liability, making it a revenue-neutral issue. |
| Summary |
In the case of Commissioner of Income Tax v. Triveni Engg. & Industries Ltd., the Delhi High Court addressed the issue of business expenditure under Section 37(1) of the Income-tax Act, 1961. The case involved the assessee's accounting policy of recognizing revenue upon the completion of projects, which included provisions for foreseeable losses. The Assessing Officer initially deemed the provision for future expenses as a contingent liability, leading to a dispute regarding the year of deductibility. However, the Tribunal allowed the deduction, stating that the expenditure was admissible and the timing of the deduction was revenue neutral. This case highlights the importance of consistent accounting practices and the principle of matching costs with revenues in tax assessments, emphasizing that disputes regarding the year of allowance can be moot if they do not impact the overall tax liability. |
| Court |
Delhi High Court
|
| Entities Involved |
Triveni Engg. & Industries Ltd.
|
| Judges |
A.K. Sikri,
Ms. Reva Khetrapal
|
| Lawyers |
Ms. Prem Lata Bansal,
Ajay Vohra,
Ms. Kavita Jha,
Ms. Akansha Aggarwal,
Somnath Shukla
|
| Petitioners |
Commissioner of Income Tax
|
| Respondents |
Triveni Engg. & Industries Ltd.
|
| Citations |
2011 SLD 2757,
(2011) 36 ITR 374
|
| Other Citations |
Indian Molasses Co. (P.) Ltd. v. CIT [1959] 37 ITR 66 (SC),
Shree Sajjan Mills Ltd. v. CIT [1985] 156 ITR 585 (SC),
CIT v. Lachhman Das Mathura Das [1980] 124 ITR 411 (All.),
CIT v. Seshasayee Industries Ltd. [2000] 242 ITR 691 (Mad.),
CIT v. Bilahari Investment (P.) Ltd. [2008] 299 ITR 1 (SC),
CIT v. Realest Builders & Services Ltd. [2008] 307 ITR 202 (SC),
CIT v. Woodward Governor India (P.) Ltd. [2009] 312 ITR 254 (SC),
Calcutta Co. Ltd. v. CIT [1959] 37 ITR 1 (SC),
CIT v. Nagri Mills Co. Ltd. [1958] 33 ITR 681 (Bom.),
CIT v. Shri Ram Pistons & Rings Ltd. [2008] 174 Taxman 147 (Delhi)
|
| Laws Involved |
Income-tax Act, 1961
|
| Sections |
37(1)
|