Statutory expenses must be allowed in the same year, and the matching concept applies to spreading expenditure over ensuing years.

K.S. Jhaveri, J.

1. By way of this appeal, the appellant-assessee has challenged the judgment and order dated 8.9.2006 passed by the Income Tax Appellate Tribunal, Ahmedabad Bench 'C', Ahmedabad (for short, "the Tribunal") in Income Tax Appeal No. 1662/AHD/2006 for the assessment year 2003-04. By the impugned order, the Tribunal reversed the decision of Commissioner of Income Tax (Appeals)-XVI, Ahmedabad [for short, "CIT (A)"] and restored the disallowance of Rs. 12,28,560/- made by the Assessing Officer towards stamp duty expenses incurred by the assessee in relation to the contract executed with Maharashtra State Road Transport Corporation in the course of its business.

2. This Court while admitting the appeal has framed the following question of law:-

"Whether on facts the Tribunal is right in law in confirming the disallowance of Rs. 12,28,560/- towards stamp duty expenses actually incurred by the appellant for executing contract with Maharashtra State Road Transport Corporation?"

3. Mr. Karia, learned advocate appearing with Mr. Darshan Patel for the appellant has submitted that the Tribunal has committed an error while setting aside the order of CIT(A). He has taken us through the order of CIT(A), wherein it is observed that the appellant is duty bound to pay stamp duty as per the provisions of Section 34 of the Bombay Stamp Act, 1958. It is observed that the payment of stamp duty is not for business expediency but it is in the nature of a compulsory levy under the Bombay Stamp Act. It is legally settled that accounting practice cannot over rider the provisions of the Income Tax Act, 1961. It is further observed that the stamp duty paid by the appellant during the year under consideration is a compulsory statutory levy and would not restrict the profits of the future years and ordinarily revenue expenditure incurred wholly and exclusively for the purpose of business must be allowed in its entirety in the year in which it is incurred and it cannot be spread over a number of years.

4. He has also taken us through the material on record and submitted that the view taken by the Tribunal is contrary to the decision of the Supreme Court in the case of India Cements Ltd. v. Commissioner of Income Tax reported in (1966) 60 ITR 52, wherein it is observed as under:-

"To summarize this part of the case, we are of the opinion that: (a) the loan obtained is not an asset or advantage of an enduring nature: (b) that the expenditure was made for securing the use of money for a certain period; and (c) that it is irrelevant to consider the object with which the loan was obtained. Consequently, in the circumstances of the case, the expenditure was revenue expenditure within section 10(2)(xv)."

5. He has also relied upon the decision of the Apex Court in the case of Taparia Tools Ltd. v. Joint Commissioner of Income-Tax reported in [2015] 372 ITR 605, wherein it is observed that as per the ordinary rule revenue expenditure incurred in a particular year is to be allowed in that year. Thus, if the assessee claims that expenditure in that year, the Department cannot deny it. However, in a case where the assessee himself wants to spread the expenditure over a period of ensuing years, it can be allowed only if the principle of "matching concept" is satisfied, which upto now has been restricted to cases of debentures.

6. Mr. Bhatt, learned counsel for the respondent has supported the impugned order and contended that the Tribunal has not committed any error. He has relied upon the observations of the Assessing Officer and the Tribunal made in the impugned order and contended that the Tribunal has rightly relied upon the decision of the Apex Court in the case of Madras Industrial Investment Corporation v. Commissioner of Income Tax reported in 225 ITR 802. He has also relied upon a decision of this Court rendered in Tax Appeal No. 1471 of 2005, wherein it is held as under:--

"5.1 In this regard it shall be relevant to peruse the Notification No.