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2019 (1) TMI 1527 - AT - Income TaxDisallowing of provision debited to the Profit and Loss Account - CIT-A deleted part addition on the ground that this provision is unascertained expenditure but it was the liability that was existing at the end of the financial year but the payments made subsequent to the end of the financial year but before the finalization of the accounts - Held that:- AS-4 says that the conditions for an event prevail on the balance and crystallized between the close of the financial year and approval of accounts, such events shall be known as adjusting events and have to be recorded in the previous year. The provision made by the assessee for meeting the liability incurred by it before the date of closure of accounts is an allowable deduction out of gross receipts of the accounting year during which the provision for meeting such expenditure was made and such a liability is not a contingent liability. Rule of consistency demand that unless and until something illegal is shown, AO has to follow the course of action taken for the earlier years. We found that the liability said to have been discharged in this matter by way of provision was in respect of the expenses already incurred during the financial year 2011-12 and payments made subsequent to the closure of the books of accounts but before the approval of the same. While respectfully following the decision of the Hon’ble Apex Courtin the case of Bharat Earth Movers [2000 (8) TMI 4 - SUPREME COURT] and also Radhaswami Satsang vs CIT [1991 (11) TMI 2 - SUPREME COURT], we are of the considered opinion that the amount under the provision is an allowable deduction.Further, in these peculiar circumstances, no revenue implications are there. While accepting the contention of the assessee, we find that the appeal is devoid of merit and is liable to dismissed - Decide against revenue
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