Gujarat Power Corporation Ltd. v. Add. CIT (2013) 21 ITR 683 (Ahd.) (Trib.)

S.35D: Amortisation of preliminary expenses-Expenditure not for expansion of industrial undertaking or for

setting up new industrial undertaking-Deduction is not available- Interpretation-General principles-Principle

of consistency not applicable to perpetuate mistake.

The assessee claimed deduction under section 35D of expenses comprising fee to Registrar of Companies, stamp fee and printing charges. The Assessing Officer held that fee paid to Registrar of Companies was not fee for extension of the company but for expansion of capital. The Assessing Officer held that the assessee had not fulfilled the requirement of sub-section (1) and (2) of section 35D and therefore, the assessee was not eligible for deduction under section 35D. The Commissioner (Appeals) observed that the deduction under section 35D claimed in this year was in respect of expense incurred in the financial years 1994-95 and 2000-01 and the assessee was claiming amortization of these expenses under section 35D and it was allowed in the assessment years 1995-96 and 2002-03 and, therefore, in the present year, there could not be any disallowance on this account. On this basis, the Commissioner (Appeals) deleted this disallowance in all the three years. On appeal to the Tribunalthe Tribunal held that the Assessing Officer had given a specific finding that the assessee had not fulfilled the conditions under sub-sections (1) and (2) of section 35D and there was no finding given by the Commissioner (Appeals) in his order that the assessee fulfilled these conditions. The order of the Commissioner (Appeals) was on this basis that since the deduction was allowed in the earlier years, the same could not be disallowed in the present year. The assessment order for the assessment year 1995-96 was available in the paper book and there was no discussion in the assessment order on this aspect. Regarding the rule of consistency followed by the

Commissioner (Appeals) in deleting this disallowance, if the view taken by the Assessing Officer in the earlier year was a  possible view then there may be a case for taking the same view in the present year under the rule of consistency. But if the view taken in the earlier year was not a possible view then a mistake could not be perpetuated in the name of consistency. The Commissioner (Appeals) was not justified in deleting the disallowance made by the Assessing Officer under section 35D.(A. Y. 2003-2004 to 2006-2007)