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2019 (7) TMI 1513 - ITAT PUNEAddition on account of negative Contract In Progress (CIP) - HELD THAT:- We find the AS-7 which existed prior to letter dated 01st April, 2003 continues to remain the same; but for minor changes. There are minor changes in relation to the computational issues. There is no change so far as “cost based” percentage completion method in concerned. Therefore, the computation of “recognition income” is concerned, the order of the CIT(A) is fair and reasonable and the same does not call for any interference. Accordingly, relevant grounds stand allowed in favour of the assessee. So far as adjustments made by the AO to the estimated cost is concerned, the CIT(A) already granted part relief to the assessee. With reference to the freight outward to be included in the estimated total cost, we find it is a case of reimbursement of the actual cost incurred by the assessee. The inclusion in the total estimated cost when the same is returned has no effect on the income aspect. Therefore, being the case of reimbursement, there is no profit element. Consequently, recognition income of such reimbursement is not appropriate. Therefore, the order of the CIT(A) on this issue requires to be reversed. Provision towards leave travel allowance and medical reimbursement to the employees - HELD THAT:- The assessee has furnished copy of the scheme which is combined for medical reimbursement and the leave travel concession. The scheme has been reproduced in para 3.1 of the order. The Co-ordinate Bench of Tribunal deleted the addition as now been upheld by the Tribunal [2019 (7) TMI 882 - ITAT PUNE] We find no reason to interfere with the findings of Commissioner of Income Tax (Appeals). Accordingly, ground No. 2 of the appeal is dismiss Disallowance of liquidated damages - allowable business expenditure - HELD THAT:- “Commercial expediency” is a term of wide import and has been held to include such expenditure as a prudent businessmen incurs for the purpose of business. No disallowance of liquidated damages were made in earlier years though the assessee was following similar methodology for accounting.CIT(A) had accepted the allowability of claim for liquidated damages as a business expenditure then he should have not directed the AO to allow deduction to the extent there were Liquidated damages clauses in the purchase orders. When the expenses have been incurred for the purpose of business and during the course of business, the claim of Assessee for allowing the expenditure be upheld
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