KOREA RURAL COMMUNITY CORPORATION,NEW DELHI V. DCIT, CIRCLE-2(1)(2), NEW DELHI

ITA 8236/DEL/2018

AI Insights

The case involves Korea Rural Community Corporation appealing against the orders of the DCIT, Circle-2(1)(2), International Taxation/Assessing Officer, New Delhi, and the Dispute Resolution Panel (DRP), which disallowed certain expenses claimed in the assessment year 2015-16. The primary contention was regarding the disallowance of prior period expenses amounting to Rs.1,77,64,750, which the assessee argued were crystallized in the relevant previous year and thus should be allowable in the current assessment year. The Tribunal's decision focused on the legal interpretation of when such expenses should be recognized for tax purposes, ultimately siding with the assessee based on judicial precedents.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 473571 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-03-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2015-2016
• Other Referred Cases: ACIT Vs. National Agricultural Cooperative Marketing Federation of India
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VIJAY B. BASANTA
• Assessee Lawyers: AKSHAY SAPRAY
• Keywords: Opportunity of being heard
• Section: 37(1); 40(a)(ia)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH: ‘D’ NEW DELHI BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA No.8236/Del/2018 Assessment Year: 2015-16 Korea Rural Community Corporation, H-54A, Kalkaji, New Delhi Vs. DCIT, Circle-2(1)(2), New Delhi PAN: AAFCK6880J (Appellant) (Respondent) ORDER PER SATBEER SINGH GODARA, JM This assessee’s appeal for assessment year 2015-16 is directed against DCIT, Circle-2(1)(2), Intl. Taxation/Assessing Officer, New Delhi’s order dated 30.12.2018 involving proceedings under section 144C(13)/143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’). 2. The assessee pleads the following substantive grounds in the instant appeal: Assessee by Sh. Akshay Sapray, Adv. Department by Sh. Vijay B. Basanta, CIT(DR) Date of hearing 11.03.2025 Date of pronouncement 26.03.2025 ITA No.8236/Del/2018 2 | P a g e 1. That of facts and in law the orders passed by DCIT. Circle 2(1)(2), International Tax (hereinafter referred to as \"AO\") and the Dispute Resolution Panel (hereinafter referred to as \"DRP\"} are bad in law and void-ab-initio. 1.1 That on facts and in law the AO/DRP have erred in not granting adequate opportunity of being heard. 2. That on facts and in law the AO / DRP have erred in making upholding disallowance of Provision made for Expenses of Rs 16,51,272/- 3. That on facts and in law the AO / DRP have erred in making / upholding disallowance of expenses incurred of Rs 1,77,64,750/- by alleging that these are Prior Period Expenses. 3.1 That on facts and in law the AO has erred in also holding that expenditure incurred of Rs 1,77,64,750/- is to be disallowed as per provisions of section 40(a)(ia) of the Act, 4. That on facts and in law the AO/DRP have erred in making / upholding disallowance @ 30% of following expenses by invoking provisions of section 40(a)(ia) of the Act: (a) Professional Fees of Rs 1,06,000/- (b) Drafting Expenses of Rs 2,69,200/- (c) Consultancy Charges of Rs 1,35,000/- That the appellant prays for the leave to add, alter, amend and/or vary the grounds of appeal at or before the time of hearing. 3. Learned counsel fairly submits, at the outset, that the assessee only wishes to press for its third substantive ground herein seeking to allow prior period expenditure claimed amounting to Rs.1,77,64,750/-; disallowed in the course of assessment framed on 30th October, 2018, and upheld in the lower appellate discussion. Suffice to say, it transpires from a perusal of the assessment discussion at page 5 in para 4.1 that the assessee had sought to explain its prior period expenditure on the ground that the same got crystalized in the relevant previous year only ITA No.8236/Del/2018 3 | P a g e since the corresponding recipient couldn’t complete all the relevant formalities followed by crystallization thereof. 4. The Revenue’s case, on the other hand, in the given facts is that the impugned expenditure had been incurred in the earlier assessment years, it is not allowable in the impugned assessment year going by section 37(1) of the Act. It could hardly dispute the assessee’s clinching claim of crystallization thereof in the relevant previous year only. 5. That being the case, we hereby quote (2022) 141 taxmann.com 108 (Del), ACIT Vs. National Agricultural Cooperative Marketing Federation of India that such an expenditure could very well be allowed in the year of crystallization as well. The assessee succeeds in the instant sole substantive ground no. 3 in very terms. Necessary computation shall follow as per law. 6. No other argument or ground has been pressed before us. 7. This assessee’s appeal is partly allowed in above terms. Order pronounced in the open court on 26th March, 2025 Sd/- Sd/- (S. RIFAUR RAHMAN) (SATBEER SINGH GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 26th March, 2025. RK/- Copy forwarded to: 1. Appellant ITA No.8236/Del/2018 4 | P a g e 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi "