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2013 (1) TMI 109 - AT - Income TaxProvision for CISF security expenses - liability is in the nature of a contingent liability and cannot be allowed as a deduction for the AY 2007-08 - Held that:- Perusal of records depicts that the liability to share the expenses for the security provided by NFC is an accrued liability. In fact, NFC had raised bills and assessee paid for the same for the first two quarters for the relevant previous year but for the last two quarters, for whatever reason, the NFC has not raised bills and assessee therefore had to make a provision for the said expenditure. Similar expenditure has been claimed and allowed by the ITAT in assessee's own case for the AY 2003-04 following the decision of the Apex Court in case of Bharat Earth Movers v. CIT [2000 (8) TMI 4 - SUPREME COURT] wherein held that once a liability has accrued, then even if such liability can be quantified and settled only at future point of time, is allowable deduction in the year in which the liability has accrued. Similarly Supreme Court in the case of Rotork Controls India (P.) Ltd. v. CIT [2009 (5) TMI 16 - SUPREME COURT OF INDIA] had held that a provision made for warranty expenses, even though will be actually expended at a later point of time, is an allowable expenditure in the year of sale of product for which such warranty has been given The liability to pay security expenses to NFC accrued during the financial year and it was not contingent upon any other happening. The mere fact that it was not quantified during the year by way of raising of bills by NFC could not alter the fact that such liability even though on an estimated basis is an accrued and allowable liability. In the present case there is no dispute that the liability to share the expenses for security provided by NFC has accrued and pertains to the year under appeal. Therefore, the estimated liability for such expenses provided for in the books of account by the assessee is an allowable expenditure - appeal of the Assessee regarding disallowance of ₹ 69 lakhs out of the provision made for their share of security expenses is allowed. Weighted deduction u/s.35(2AB) - Held that:- As per the provisions of sec 35(2AB) as applicable to the relevant AY, the expenditure incurred by the assessee in any approved in-house research facility, to the extent of approved by the prescribed authority, is entitled to weighted deduction of 150% of such approved expenditure. Therefore, the expenditure as approved by the DSIR in the certificate given by them in Form 3CL alone is to be granted weighted deduction. The DSIR in their certificate has certified expenditure eligible for weighted deduction as ₹ 3,126.02 lakhs. Therefore, it is not for either the assessing authority or the appellate authority to decide on the expenditure which will be entitled to weighted deduction u/s.35(2AB) - Uphold the decision of lower authorities in restricting the weighted deduction u/s.35(2AB) to ₹ 46,89,03 lakhs and disallowing sum of ₹ 1,69,73,987 out of the claim made by the assessee. Disallowance of provision for wage revision arrears - Held that:- As held in the assessee's appeal (supra) the liability to share the expenses for the security provided by NFC is an accrued liability. Hence the entire amount of ₹ 2,62,42,012 claimed by the Assessee is an allowable expenditure.
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