Korea Rural Community Corporation Vs. DCIT

Parties Involved

Facts Summary

The assessee, Korea Rural Community Corporation, appealed against the order of the DCIT, Circle-2(1)(2), Intl. Taxation/Assessing Officer, New Delhi, dated 30.12.2018, involving proceedings under section 144C(13)/143(3) of the Income-tax Act, 1961. The assessee sought to allow prior period expenditure amounting to Rs. 1,77,64,750/-, which was disallowed during the assessment framed on 30th October, 2018, and upheld in the lower appellate discussion. The assessee argued that the expenditure got crystalized in the relevant previous year only since the corresponding recipient couldn’t complete all the relevant formalities followed by crystallization thereof. The Revenue, on the other hand, contended that the impugned expenditure had been incurred in the earlier assessment years and thus, was not allowable in the impugned assessment year as per section 37(1) of the Act.…

Legal Issues

• 1. Whether the AO/DRP erred in not granting adequate opportunity of being heard.
• 2. Whether the AO/DRP erred in disallowing Provision made for Expenses of Rs 16,51,272/-.
• 3. Whether the AO/DRP erred in disallowing expenses incurred of Rs 1,77,64,750/- by alleging that these are Prior Period Expenses.
• 4. Whether the AO/DRP erred in disallowing @ 30% of Professional Fees, Drafting Expenses, and Consultancy Charges by invoking provisions of section 40(a)(ia) of the Act.

Judgment Outcome

Decided in favour of Assessee.

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