DCIT, Jaipur V. M/S RAJASTHAN STATE INDISTRIAL, Jaipur

ITA 580/JPR/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 87583 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-03-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 12-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROLEE AGARWAL
• Assessee Lawyers: P C PARWAL CA DHK
• Section: 43B

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; ,OA JH VH-VKJ-EHUK] YS[KK LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JM & SHRI T.R. MEENA, AM VK;DJ VIHY LA-@ ITA NO. 580/JP/2012 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2008-09 THE DCIT CIRCLE- 6 JAIPUR CUKE VS. M/S. RAJASTHAN STATE INDUSTRIAL DEVELOPMENT & INVESTMENT CORPORATION LTD. UDYOG BHAWAN, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AABCR 4695 J VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY : SMT. ROLEE AGARWAL, CIT -DR FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI P.C. PARWAL , CA LQUOKBZ DH RKJH[K@ DATE OF HEARING : 24/02/2015 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 27/03/2015 VKNS'K@ ORDER PER R.P. TOLANI, JM THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LD. CIT(A)-II, JAIPUR DATED 21-03-2012 FOR THE ASSESSME NT YEAR 2008-09 RAISING FOLLOWING GROUNDS. (I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD. CIT(A) HAS ERRED IN DELETING ADDITION OF R S. 2,80,95,000/- MADE ON ACCOUNT OF UNDER VALUATION OF THE STOCK OF SHAR ES AND SECURITIES WITHOUT APPRECIATING THAT THE ASSESSEE CHANGED THE METHOD OF VALUATION OF CLOSING STOCK THOUGH THE METHOD OF VALUATION OF OPE NING STOCK WAS AS PER EARLIER PRACTICE. ITA NO. 580//JP/2012 DCIT VS. M/S. RAJASTHAN STATE INDUSTRIAL DEVELOPMEN T & INVESTMENT CORPORATION LTD. , JAIPUR . 2 (II) ALLOWING THE CLAIM OF MAINTENANCE CHARGES OF R S. 2,68,12,000/- IN RESPECT OF TRANSFERRED INDUSTRIAL AREA. (III) ALLOWING THE CLAIM OF PRIOR PERIOD EXPENSES O F RS. 42,81,931/-. 2.1 BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S A STATE INDUSTRIAL INVESTMENT CORPORATION ENGAGED IN THE DEVELOPMENT O F INDUSTRIAL AREAS IN THE STATE OF RAJASTHAN. DURING THE COURSE OF ITS AC TIVITIES, IT HAS TO INVEST IN SHARES AND SECURITIES WHICH ARE HELD AS STOCK IN TRADE. DURING THE YEAR IN QUESTION, THE ASSESSEE CHANGED ITS METHOD OF VAL UATION OF STOCK OF THESE SHARES AND SECURITIES AT COST OR AT MARKET VALUE WH ICHEVER WAS LESS AS AGAINST VALUATION OF CERTAIN SHARDS AT COST / BOOK VALUE. THIS CHANGE IN VALUATION METHOD RESULTED IN REDUCTION IN THE VALU ATION OF STOCK BY RS. 276.95 LACS (MISTAKENLY TAKEN BY THE AO AT RS. 280 .95 LACS). ON QUERIES BY THE AO, THE ASSESSEE EXPLAINED THAT AS PER AS-2, INVENTORIES OF SHARES, DEBENTURES AND OTHER FINANCIAL INSTRUMENTS HELD AS STOCK IN TRADE SHOULD BE VALUED AT COST OR AT NET REALIZABLE VALUE WHICHE VER WAS LESS. THE METHOD OF VALUATION WAS CHANGED AS PER POLICY ADOPT ED BY HIGHER AUTHORITIES IN STATE GOVT. THE AO DID NOT DISPUTE T HE FACT ABOUT THE APPLICABILITY OF AS-2, HOWEVER MADE AN ADDITION OF RS. 280.95 LACS. 2.2 AGGRIEVED, THE ASSESSEE PREFERRED FIRST APPEAL AND ADVANCED VARIOUS CONTENTIONS AND JUDICIAL PRONOUNCEMENTS TO SUPPORT ITS CLAIM WHICH FOUND ITA NO. 580//JP/2012 DCIT VS. M/S. RAJASTHAN STATE INDUSTRIAL DEVELOPMEN T & INVESTMENT CORPORATION LTD. , JAIPUR . 3 FAVOR WITH LD. CIT(A). FOR ACCORDING RELIEF LD. CIT (A) LD. CIT(A) RELIED ON FOLLOWING JUDGMENTS. (I) CIT VS. JINDAL SAW PIPES LTD. 328 ITR 338 (DEL.) (II) DCIT VS. MAJESTIC HLDING & FINVEST (P) LTD. 00 2 ITR TRIB. 407 . (III) CIT VS. H.P. STATE CIVIL SUPPLIES CORPORATION LTD., 309 ITR 102 (H.P.) (IV) CIT VS. GEORGE OAKES LTD., 303 ITR 357 (MAD.) (V) REFORM FLOUR MILLS (P) LTD. VS. CIT , 114 ITR 227 (CAL.) (VI) CIT VS. SOMA TEXTILE INDUSTRIES LTD. , 253 ITR 137 (GUJ.) (VII) HELA HOLDING (P) LTD. VS. CIT , 263 ITR 129 (CAL.) (VIII) CIT VS. CARBORANDUM UNIVERSAL LTD. , 149ITR 760 (MAD.) RELYING ON THESE JUDGEMENTS, THE LD. CIT(A) UPHELD THE METHOD OF VALUATION ADOPTED BY THE ASSESSEE AND DELETED THE ADDITIONS BY FOLLOWING OBSERVATIONS. .. IN THE CASE OF CIT VS. NATIONAL GRINDLAYS BAN K LTD. (145 ITR 457,IT WAS HELD BY HON'BLE CALCUTTA HIGH COURT THAT WHERE THE METHOD OF VALUATION OF THE CLO SING STOCK OF SHARES WAS CHANGED FROM THE MARKET PRICE TO LOW OF COST OR MARKET PRICE AND THE ASSESSEE CLARIFIED THAT IT WAS NOT A CASUAL DEPARTURE AND THAT IT WOULD FOLLOW THE SAME REGULARLY IN THE FUTURE, THE CHANGE WAS HELD TO BE BONA FIDE. THEREFORE, THE ASSESSEE COULD THE ACCOUNTING POLICY IF THE CHA NGE WAS BONA FIDE OR REQUIRED BY THE STATUTE OR WAS IN ACCO RDANCE ITA NO. 580//JP/2012 DCIT VS. M/S. RAJASTHAN STATE INDUSTRIAL DEVELOPMEN T & INVESTMENT CORPORATION LTD. , JAIPUR . 4 WITH THE STANDARD ACCOUNTING PRACTICES AND THE SAME WAS THEREAFTER FOLLOWED. IN THE PRESENT CASE, THE CHANG E WAS BONA FIDE AND THIS CHANGE IN THE METHOD OF VALUATIO N HAD BEEN FOLLOWED REGULARLY. IN A.Y. 2005-06, THE APPEL LANT HAD CHANGED THE METHOD OF VALUATION OF STOCK OF LAND WH ICH WAS NOT APPROVED BY THE AO AND ADDITION OF RS. 247.62 L ACS WAS MADE. THIS WAS CONFIRMED BY THE CIT (A). HOWEVER, T HE HON'BLE ITAT DELETED THE ADDITION HOLDING THAT ONC E THE BONA FIDE OF THE CHANGE IN THE METHOD OF VALUATION OF CLOSING STOCK WAS ACCEPTED, LOWER AUTHORITIES WERE NOT JUST IFIED IN MAKING THE ADDITION. I ACCORDINGLY DIRECT THE AO T O DELETE THE ADDITION OF RS. 2,80,95,000/- MADE BY HIM. THIS GROUND OF APPEAL IS ALLOWED . 2.3 THE LD. DR RELIED ON THE ORDER OF THE AO. 2.4 THE LD. COUNSEL CONTENDS THAT ASSESSEES BONA F IDES IN ADOPTING THE CHANGED METHOD OF VALUATION OF THE CLOSING STOCK AS PER AS-2 HAS NOT BEEN DISPUTED BY THE AO. THERE IS NO ADVERSE FINDIN G ABOUT ASSESSEE'S INTENTION OF EVADING ANY TAX IN CHANGING THE METHOD OF VALUATION WHICH WAS IN CONFORMITY WITH ICAI GUIDELINES AND DIRECTED BY GOVT. POLICY AS FINANCIAL ADVISERS. THIS BENCH OF ITAT VIDE ITS ORD ER DATED 24-06-2011 IN ASSESSMENT YEAR 2005-06 CONSIDERED THE ISSUE OF CHANGE IN METHOD OF VALUATION OF STOCK IN RESPECT OF INTEREST COST AND HELD AS UNDER:- 14. CONSIDERING THE ABOVE SUBMISSION, WE FIND MERITS IN THE CONTENTS OF THE LD. AR THAT THE INCLUSION OF THE INTEREST COST IN VALUING THE STOCK WAS QUALIFIE D BY THE AUDITORS SINCE AS A RESULT OF SUCH INCLUSION OF INT EREST IN THE VALUATION OF STOCK OF LAND THE PROFIT UPTO 31-03-20 04 WAS OVER STATED BY RS. 2993.18 LACS. ACCORDINGLY THE ME THOD OF VALUATION OF STOCK OF LAND WAS CHANGED. THE BONA FI DE OF THIS ITA NO. 580//JP/2012 DCIT VS. M/S. RAJASTHAN STATE INDUSTRIAL DEVELOPMEN T & INVESTMENT CORPORATION LTD. , JAIPUR . 5 CHANGE IS NOT DISPUTED BY THE LOWER AUTHORITIES. ON CE THE BONA FIDE OF THE CHANGE IN THE METHOD OF VALUATION OF THE CLOSING STOCK IS ACCEPTED, THE EFFECT OF SUCH CHANG E HAS TO COME IN THE ACCOUNT OF THE YEAR IN WHICH CHANGE IS MADE AND NO EFFECT IS REQUIRED TO BE GIVEN IN THE OPENING ST OCK. IT A PROCEDURE OF CHANGING THE VALUE OF OPENING STOCK IS ADOPTED IT WILL LEAD TO A CHAIN REACTION OF CHANGES AND THE REFORE, CHANGE HAS TO BE ACCEPTED NOTWITHSTANDING THE FACT THAT A PREJUDICE OR DETERMINATION IS CAUSED TO THE REVENUE IN THE FIRST YEAR WHEN THE CHANGE OF METHOD WAS BROUGHT AB OUT. WE, THUS IN VIEW OF THE CITED DECISIONS BY THE LD. AR DOES NOT FIND ANY JUSTIFICATION TO CHANGE THE OPENING STOCK. THE LOWER AUTHORITIES WERE THUS NOT JUSTIFIED IN MAKING AN AD DITION OF RS. 2479.62 LAS. ONCE THE BONA FIDE OF THE CHANGE I N THE METHOD OF VALUATION OF CLOSING STOCK IS ACCEPTED. W E, THEREFORE, WHILE SETTING ASIDE THE ORDERS OF THE LO WER AUTHORITIES IN THIS REGARD, DIRECT THE AO TO DELETE THE ADDITION OF RS. 2479.62 LACS IN QUESTION. GROUND NO . 2 IS THUS ALLOWED. 2.5 THE LD. COUNSEL FOR THE ASSESSEE FURTHER CONTEN DS AS UNDER:- (I) THE APPLICABILITY OF AS-2 AS PER PRESCRIBED ACCOUNTING STANDARD AND METHOD OF VALUATION HAS BEE N CHANGED AS PER THE POLICY DECISION TAKEN AT THE LEV EL OF FINANCIAL ADVISERS TO CONFORM TO AS2 (II) THE APPLICABILITY OF AS-2 HAS NOT BEEN DISPUTE D BY THE AO AND THERE IS NO ADVERSE OBSERVATION ABOUT THE AS SESSEES BONA FIDE IN CHANGING THE METHOD OF VALUATION. (III) THE LD. CIT(A) HAS RELIED ON THE CATENA OF JU DGMENTS REFERRED ABOVE AND HELD THAT WHEN THE BONA FIDE OF THE ASSESSEE IS NOT IN DOUBT ABOUT THE CHANGE IN METHO D OF VALUATION AS PER AS-2 I.E. COST OR MARKET PRICE WHI CHEVER IS LOW IS STATUTORY APPROVED BY ICAI, THE ORDER OF THE LD. CIT(A) IS CORRECT. BESIDES THE ITAT IN ASSESSMENT YEAR 2005-06 HAS A SIMILAR VIEW THAT THE ASSESSEE CAN EF FECT THE CHANGE IN METHOD OF VALUATION OF STOCK. ITA NO. 580//JP/2012 DCIT VS. M/S. RAJASTHAN STATE INDUSTRIAL DEVELOPMEN T & INVESTMENT CORPORATION LTD. , JAIPUR . 6 3.1 APROPOS GROUND NO. 2, THE LD. DR RELIED ON THE ORDER OF THE AO. 3.2 BRIEF FACTS IN THIS BEHALF ARE THAT STATE GOVT. DEVELOPED CERTAIN INDUSTRIAL AREAS IN THE STATE OF RAJASTHAN BEFORE I NCORPORATION OF THE ASSESSEE. THEREAFTER THE MAINTENANCE OF THESE 37 IN DUSTRIAL AREAS WERE TRANSFERRED TO ASSESSEE IN OCT. 1979 AND THE STATE GOVT. DISCONTINUED THE MAINTENANCE OF THESE AREAS, HOWEVER NO CLEAR PROVIS ION ABOUT COLLECTION OF MAINTENANCE CHARGES WAS PROVIDED. SINCE THE ASSE SSEE WAS OBLIGED TO MAINTAIN THESE AREAS IT HAD TO BEAR EXPENSES IN THI S BEHALF. THE AUDITORS COMMENTED IN PARA 4.2(A) TO THE EFFECT THAT EXPEN DITURE OF RS. 268.12 LACS RELATING TO MAINTENANCE OF THE TRANSFERRED IND USTRIAL AREA WAS TREATED AS EXPENDITURE BY RIICO WITHOUT RETAINING THE CORRE SPONDING INCOME FROM SUCH AREAS. AO ON THIS BASIS RAISED THE QUERY, ASSESSEE FURNISHED DETAILED EXPLANATION IN THIS BEHALF, RELYING ON THE OBSERVATION OF THE AUDITOR LD. AO DISALLOWED THE IMPUGNED AMOUNT. 3.3 AGGRIEVED, THE ASSESSEE PREFERRED FIRST APPEAL WHEREIN THE LD. CIT(A) DELETED THE SAME BY FOLLOWING OBSERVATIONS. 4.1 I HAVE DULY CONSIDERED THE SUBMISSION OF THE APPELLANT. ON PERUSAL OF THE ASSESSMENT ORDER, IT I S SEEN THAT THE AO WAS MAINLY AGGRIEVED WITH THE FACT THAT THOUGH T HE MAINTENANCE EXPENSES IN RELATION TO TRANSFERRED IND USTRIAL AREAS HAD BEEN CLAIMED BY THE APPELLANT YET NO INCOME FRO M SUCH AREAS WAS CREDITED TO THE PROFIT AND LOSS ACCOUNT. THE IN DUSTRIAL AREAS ITA NO. 580//JP/2012 DCIT VS. M/S. RAJASTHAN STATE INDUSTRIAL DEVELOPMEN T & INVESTMENT CORPORATION LTD. , JAIPUR . 7 DEVELOPED AND MAINTAINED BY THE GOVERNMENT WERE TRA NSFERRED TO THE APPELLANT ON 10-10-1979 FOR UPKEEP AND MAINTENA NCE. FOR THIS, GRANTS WERE ALSO PROVIDED BY THE GOVERNMENT. HOWEVE R, THE GOVERNMENT VIDE ITS ORDER DATED 3-01-1991 DIRECTED THE APPELLANT TO DEPOSIT THE DEVELOPMENT CHARGES AND ECONOMIC REN T WITH THE STATE GOVT. AND IN TURN, THE GOVT. WAS TO PROVIDE G RANTS FOR MAINTENANCE OF THESE INDUSTRIAL AREAS. HOWEVER, UPT O 31-03-1999. THE APPELLANT WAS GIVEN GRANTS OF RS. 10.05 CRORES THOUGH IT HAD INCURRED EXPENDITURE OF RS. 12.56 CRORES. THEREAFTE R, THE GOVT. DID NOT RELEASE ANY GRANTS FOR MAINTENANCE OF THESE IND USTRIAL AREA. I FIND THAT UPTO A.Y. 2004-05, THE RECOVERY MADE IN R ESPECT OF SUCH INDUSTRIAL AREA WAS DEPOSITED WITH THE GOVT. AND AG AINST THE EXPENDITURE OF RS. 1776.36 LAKHS, THE GRANT OF RS. 1005.74 LACS WAS RECEIVED FROM THE GOVT. AND THEREFORE, THE DEFICIT OF RS. 770.72 LACS WAS CLAIMED AS EXPENDITURE IN A.Y. 2005-06.THIS EXP ENDITURE WAS DISALLOWED BY THE AO IN ASSESSMENT YEAR 2005-06 BUT ALLOWED BY THE ITAT IN ITA NO. 138/JP/2009 DATED 8-01-2010 AFT ER A DETAILED DISCUSSION IN PARA 3 TO 9 OF THE ORDER. IT IS FURTH ER SEEN THAT FROM ASSESSMENT YEAR 2005-06 TO 2010-11, AN AGGREGATE EX PENDITURE OF RS. 1021.26 LACS WAS INCURRED AND THERE WAS A RECOV ERY OF 1471.29 LACS FROM THESE AREAS. OUT OF DEVELOPMENT AND ECONO MIC RENT COLLECTED BY THE APPELLANT, AN AMOUNT OF RS. 12.10 CRORES WAS PAYABLE TO THE GOVT. AFTER LOT OF PERSUASION, THE S TATE GOVT. VIDE ITS ORDER DATED 09-10-2009, PERMITTED THE APPELLANT TO ADJUST THE RECOVER3IES MADE ON ACCOUNT OF DEVELOPMENT CHARGES AND ECONOMIC RENT AGAINST THE EXPENSES INCURRED TOWARDS UPKEEP AND MAINTENANCE OF THESE TRANSFERRED INDUSTRIAL AREAS THE AO WAS OF THE OPINION THAT THE APPELLANT HAD OFFERED THE AMOU NT OF RS. 12.10 CRORES AS INCOME IN ASSESSMENT YEAR 2010-11 HOWEVER , IT SHOULD HAVE BEEN CREDITED ON YEAR TO YEAR BASIS. I AM NOT INCLINED TO AGREE WITH THE CONTENTIONS OF THE AO. BEING A STATE GOVT. CORPORATION, THE APPELLANT COULD NOT HAVE UNILATERALLY TREATED T HE AMOUNT PAYABLE AS ITS INCOME. THE APPELLANT HAD NO RIGHT T O APPROPRIATE SUCH RECOVERY IN THE ABSENCE OF THE SANCTION BY THE GOVT. AND IT HAD AN OBLIGATION TO MAINTAIN THE INDUSTRIAL AREAS AS P ER ITS OBJECTS. SINCE THE ORDER OF THE STATE GOVT. PERMITTING ADJUS TMENT OF LIABILITY WITH MAINTENANCE EXPENSES WAS RECEIVED IN ASSESSMEN T YEAR 2010- 11, THE APPELLANT HAD RIGHTLY CREDITED THE INCOME O N CESSATION OF LIABILITY TO ITS PROFIT AND LOSS ACCOUNT. HOWEVER, IN THE CURRENT YEAR, IT IS NOT IN DISPUTE THAT THE APPELLANT HAD INCURRE D MAINTENANCE ITA NO. 580//JP/2012 DCIT VS. M/S. RAJASTHAN STATE INDUSTRIAL DEVELOPMEN T & INVESTMENT CORPORATION LTD. , JAIPUR . 8 EXPENSES OF RS. 2,68,12,000/- ON UPKEEP OF TRANSFER RED INDUSTRIAL AREAS AND IT WAS INCURRED FOR THE PURPOSE OF THE BU SINESS. IN VIEW OF ABOVE FACTS, THE APPELLANT HAD RIGHTLY CLAIMED T HE EXPENDITURE OF RS. 2,68,12,000/-. ON THE OTHER HAND, THE DEVELOPME NT CHARGE AND ECONOMIC RENT RECEIVED FROM THE ALLOTTEES OF LAND W ERE PAYABLE TO THE STATE GOVT. IN THESE CIRCUMSTANCES, IF THE EXPE NDITURE WAS DISALLOWED, IT WOULD AMOUNT TO DOUBLE TAXATION INAS MUCH AS THE RECOVERY HAD BEEN OFFERED BY THE ASSESSEE FOR TAX I N ASSESSMENT YEAR 2010-11. I ACCORDINGLY DIRECT THE AO TO DELETE THE ADDITION OF RS. 2,68,12,000/- MADE BY HIM. THIS GROUND OF APPEA L IS ALLOWED. 3.4 IT IS PLEADED BY THE LD. AR THAT THERE IS NO IN FIRMITY IN THE ORDER OF THE LD. CIT(A) AS HE HAS FOLLOWED ITAT ORDER IN ITA NO. 138/JP/2009 DATED 8-01-2010 FOR THE ASSESSMENT YEAR 2005-06 AL LOWING THIS CLAIM OF THE ASSESSEE BY FOLLOWING OBSERVATIONS. 9. THE LD. AR REFERRED TO THE LETTER OF THE STATE GOVT. DATE4D 19-04-2006 WHEREIN IT HAS REFUSE D TO MAKE PAYMENT OF THE AFORESAID AMOUNT. IT IS UNDER T HESE CIRCUMSTANCES, THE LD. AR STATED THAT THE BOARD OF DIRECTORS OF THE ASSESSEE COMPANY HAVE APPROVED THE WRITE OFF OF RS. 770.62 LACS RECOVERABLE FROM THE STATE GOVT. ON ACC OUNT OF EXPENDITURE INCURRED BY THE ASSESSEE ON MAINTENANCE OF TRANSFERRED INDUSTRIAL AREA WHILE APPROVING THE ACC OUNTS FOR THE YEAR UNDER CONSIDERATION. CONSIDERING THESE MAT ERIALS FACTS, WE ARE OF THE VIEW THAT THE LOWER AUTHORITIE S WERE NOT JUSTIFIED IN MAKING AND UPHOLDING THE DISALLOWANCE OF RS. 770.62 LACS BY TREATING IT AS PRIOR PERIOD EXPENDIT URE. WE THUS WHILE SETTING ASIDE THE ORDERS OF THE LOWER AU THORITIES IN THIS REGARD DIRECT THE AO TO ACCEPT THE ABOVE CLAIM OF THE ASSESSEE. THE GROUND NO. 1 IS THUS ALLOWED. 4.1 APROPOS GROUND 3 LD. DR RELIED ON AOS ORDER. ITA NO. 580//JP/2012 DCIT VS. M/S. RAJASTHAN STATE INDUSTRIAL DEVELOPMEN T & INVESTMENT CORPORATION LTD. , JAIPUR . 9 4.2 APROPOS GROUND NO. 3, THE LD. COUNSEL FOR THE A SSESSEE CONTENDS THAT THE AO DISALLOWED THE ABOVE AMOUNT. IN FIRST A PPEAL, THE LD. CIT(A) RELIED ON ITAT ORDER IN THE CASE OF THE ASSESSEE IN ITA NO. 1267/JP/2010 FOR THE ASSESSMENT YEAR 2007-08 DATED 24-06-2011 AN D HELD THAT :- (I) PRIOR PERIOD EXPENSES IN GOVT. ORGANIZATION WHICH R EMAINED PENDING AND AWAITING SANCTION HIGHER AUTHORITIES AR E TO BE ALLOWED IN THE YEAR IN WHICH APPROVAL IS OBTAINE D. (II) THE EXPENDITURES IN QUESTION ARE AS UNDER:- (A) TA/DA, UNIFORM & LIVERIES AND MEDICAL EXPENSE S ETC. OF RS. 2,01,815/- AND THEY WERE APPROVED IN TH IS YEAR BY HIGHER AUTHORITIES. (III) HEAD OFFICE EXPENSES OF RS. 6,41,142/- AND TH E EXPENDITURE AT UNITS AMOUNTING TO RS. 7,37,626/- IN RESPECT OF GRATUITY PAYMENTS WERE OTHERWISE PAYABLE U/S 43B ON ACTUAL P AYMENTS. HEAD OFFICE BUSINESS PROMOTION EXPENSES AND VARIOUS OTHER EXPENSES, APPROVAL WAS GIVEN BY HIGHER AUTHORITIES IN THIS YEAR. THE LD. COUNSEL FOR THE ASSESSEE FURTHER CONTENDS T HAT THIS BENCH OF ITAT IN ASSESSMENT YEAR 2007-08 DECIDED THE ISSUE O F ALLOW ABILITY OF PRIOR PERIOD EXPENSES AS UNDER:- 4.2 THE TRIBUNAL WHILE DECIDING THE APPEAL IN THE CASE OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2004-0 5 HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. WHILE HOLDING SO, THE TRIBUNAL HAS REFERRED TO THE DECISION IN THE CA SE OF THE ASSESSEE FOR THE ASSESSMENT YEAR 1994-95 AND 1995-9 6 IN WHICH THE TRIBUNAL HAS HELD THAT SUCH EXPENDITURE IS ALLOWABLE. IN THE ASSESSMENT YEAR 2003-04, SUCH PRI OR PERIOD EXPENSES WAS ALLOWED BY THE TRIBUNAL VIDE ITS ORDER DATED 21-082007 IN ITA NO. 324/JP/2006. FOLLOWING THE DEC ISION ITA NO. 580//JP/2012 DCIT VS. M/S. RAJASTHAN STATE INDUSTRIAL DEVELOPMEN T & INVESTMENT CORPORATION LTD. , JAIPUR . 10 OF THE TRIBUNAL FOR THE ASSESSMENT YEAR 2003-04, TH E TRIBUNAL ALLOWED THE PRIOR PERIOD EXPENSES FOR THE ASSESSMENT YEAR 2004-05 VIDE ITS ORDER DATED 30 TH SEPT. 2008. THUS THE ISSUE OF ALLOWABILITY OF PRIOR PERIO D EXPENSES STANDS DECIDED IN FAVOUR OF THE ASSESSEE. THEREFORE , THE LD. CIT(A) WAS JUSTIFIED IN ALLOWING THE PRIOR PERIOD E XPENSES. THUS THE ISSUE IN QUESTION IS ALSO COVERED BY THE I TAT ORDER IN ASSESSEE'S OWN CASE (SUPRA). 5.1 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. SINCE THE ASSESSEE IS A STATE GOVT. ORGANIZATION AND THE ACCOUNTING POLICY AND FINANCIAL TRANSACTIONS AR E CONTROLLED BY THE STATE GOVT. FINANCIAL ADVISERS AS PER STATUTORY PRO VISIONS WHICH ARE BINDING ON THE ASSESSEE. THE ISSUE ABOUT CHANGE IN METHOD OF VALUATION IN HAS BEEN EARLIER CONSIDERED BY ITAT AS MENTIONED AB OVE AND ALLOWED THE CLAIM OF THE ASSESSEE. IT IS NOT IN DISPUTE THAT TH E CHANGE WAS INCONSONANCE WITH THE POLICY OF STATE GOVT.. THE AO HAS NOT DISPUTED THE FACT THAT AS-2 HAS BEEN CORRECTLY APPLIED, BO NA FIDES AS TO ASSESSEE'S FOR CHANGE IN METHOD OF VALUATION OF SHARES AND SEC URITIES HAS NOT BEEN QUESTIONED. THUS, WE SEE NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) WHICH IS UPHELD. THUS GROUND NO. 1 OF THE REVENUE I S DISMISSED. 6.1 APROPOS GROUND NO. 2 IN RESPECT OF TRANSFERRED INDUSTRIAL AREA MAINTENANCE EXPENSES, THERE IS NO DISPUTE THAT MAIN TENANCE OF 37 ITA NO. 580//JP/2012 DCIT VS. M/S. RAJASTHAN STATE INDUSTRIAL DEVELOPMEN T & INVESTMENT CORPORATION LTD. , JAIPUR . 11 INDUSTRIAL AREA WAS ASSIGNED TO THE ASSESSEE BY STA TE GOVT. WAS ASSESSEE'S OBLIGATION. THE STATE GOVT. DID NOT ALLOW THE ASSES SEE TO COLLECT THE MAINTENANCE OF THE REVENUE FOR THESE YEARS WHICH WA S SUBSEQUENTLY ALLOWED, A STATEMENT AT BAR IS MADE THAT SUCH INCOM E IS SUBSEQUENTLY OFFERED. THE EXPENDITURE WAS ASSESSEE'S LIABILITY I NCURRED DURING THE COURSE OF ITS BUSINESS. LD. CIT(A) HAS RELIED ON CA TENA OF CASE LAWS AND ITAT JUDGMENT IN ASSESSEE'S OWN CASE FOR THE ASSESS MENT YEAR 2005-06 TO SUPPORT HIS FINDINGS. WE HAVE HEARD THE RIVAL CONTE NTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IN OUR CONSIDERED VI EW, WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) WHICH IS U PHELD. THUS GROUND NO. 2 OF THE REVENUE IS DISMISSED. 7.1 APROPOS GROUND NO. 3 OF THE REVENUE WITH REGARD TO PRIOR PERIOD EXPENSES, WE FIND THAT THIS GROUND OF REVENUE IS AL SO COVERED BY THE DECISION OF THIS BENCH FOR THE ASSESSMENT YEAR 2007 -08 (SUPRA). RESPECTFULLY FOLLOWING THE DECISION OF THIS BENCH, WE FIND NO REASON TO INTERFERE IN THE ORDER OF THE LD. CIT(A) WHICH IS U PHELD. HOWEVER, THE AO WILL ENSURE THAT THE ASSESSEE DOES NOT DERIVE ANY D OUBLE BENEFIT IN RESPECT OF PRIOR PERIOD EXPENSES IN SUBSEQUENT YEARS ON AC TUAL PAYMENT BASIS. THUS GROUND NO. 3 OF THE REVENUE IS DISMISSED. ITA NO. 580//JP/2012 DCIT VS. M/S. RAJASTHAN STATE INDUSTRIAL DEVELOPMEN T & INVESTMENT CORPORATION LTD. , JAIPUR . 12 8.0 IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 /03/2 015. SD/- SD/- VH-VKJ-EHUK VKJ-IH-RKSYKUH (T.R. MEENA) (R.P.TOLANI) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 27 /03/ 2015 *MISHRA VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- THE DCIT , CIRCLE- 6, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- M/S. RAJASTHAN STATE INDUSTRIAL DEVELOPMENT & INVESTMENT CORPORATION LTD. , JAIPUR 3. VK;DJ VK;QDRVIHY ) @ CIT(A), JAIPUR 3. VK;DJ VK;QDR@ CIT, JAIPUR 4. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 5. XKMZ QKBZY@ GUARD FILE (ITA NO.580/JP/2012) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR