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2011 (5) TMI 539 - HC - Income TaxDisallowance on account of provision of MBO incentive - the assessee followed mercantile system of accounting - Held that:- The assessee was following this system consistently in the past - since the assessee has been making a provision for this liability in the past and the liability stood proved and crystallized during the previous year itself and there being insignificant difference between provision made and actual payments made in the preceding years, the method adopted by the assessee could be said to be scientific one - The business liability having definitely arisen in the accounting year, the deduction can be allowed both for the liability quantified and discharged on a future date and the provision made permitting such liability incurred would be deductable expenditure - Decided in favour of assessee. Disallowance on account of belated payment of employees’ and employer’s contribution to PF - Held that:- As both the appellate authorities have held that the payment was made by cheque within the grace period of five days beyond the statutory period and that being so, the same would constitute the payment in due date within the definition of Section 36(1) (V-a) read with Circular No. E-128(I) 60-III dated March 19, 1964 - Decided in favour of assessee.
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