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2011 (1) TMI 85 - HC - Income TaxQuestion of law – Allowance or Disallowance of Interest - The assessee had taken a credit facility from J&K Bank Ltd on the closing balance of Rs. 1,11,40,966/-, the assessee claimed that interest amounting to Rs. 16,59,292/- as deduction on accrual basis - The reasoning appears to be that since interest for the relevant period was neither shown by the assessee in its books of accounts nor by the Bank, the interest stopped accruing and hence, was in the nature of a contingent liability - Supreme Court in the case of Bharat Earth Movers v. Commissioner of Income Tax; (2000 -TMI - 5816 - SUPREME Court) – Held that "The law is settled: if a business liability has definitely arisen in the accounting year, the deduction should be allowed although the liability may have to be quantified and discharged at a future date. What should be certain is the incurring of the liability. It should also be capable of being estimated with reasonable certainty though the actual quantification may not be possible. If these requirements are satisfied the liability is not a contingent one. The liability is in praesent though it will be discharged at a future date. It does not make any difference if the future date on which the liability shall have to be discharged is not certain." -The question of law is answered in favour of the assessee and against the department Dis-allowance of expenses to the extent of Rs. 50,000/- as against an amount of Rs. 1,48,782/- claimed by the assessee - There is no basis for an ad-hoc dis-allowance of Rs. 50,000 - ITAT has accepted the case of the assessee that for minor amounts relating to conveyance etc. and other business expenses, it is impractical to have vouchers and that internal vouchers of the staff/employees of an organization will suffice - Question of law ought to be also answered in favour of the assessee - The appeal is allowed
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