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2013 (2) TMI 506 - AT - Income TaxProvision of salaries - deduction claimed u/s 37 (1) disallowed - assessee submitted that it is a Public Sector Undertaking (PSU) & the revision of salary depend upon the decision of the Government - Held that:- As decided in Bharat Earth Movers vs. CIT [2000 (8) TMI 4 - SUPREME COURT] if a business liability has definite origin 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 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 praesenti 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. Thus following the above case AO is directed to allow the claim of deduction of provision for salary of Rs.40.71 lakhs as the services rendered are in presentee - in favour of assessee. Disallowance of deduction of provision of OFC charges considering as prior period expenses - assessee's submission that it is the demand note received from the Department of Telecommunication (DOT) - Held that:- As decided in Sourashtra Cement and Chemical Industries Ltd. vs. CIT [1994 (10) TMI 30 - GUJARAT HIGH COURT] that merely because expenses relate to a transaction of an earlier year, it does not become a liability payable in the earlier year unless it can be said that the liability was determined and crystallized in the year in question on the basis of maintaining accounts on mercantile basis. As the facts of the present case are identical with the ratio laid down by the Gujarat High Court, no hesitation in following the findings. Also see Satna Stone & Lime Company vs. CIT [1989 (9) TMI 11 - CALCUTTA HIGH COURT] - in favour of assessee. Depreciation on new earth stations at Ernakulam and Jalandhar on Trial run - Direction of the CIT(A) to allow depreciation disallowed by AO as the same have not been put to use for business purpose - Held that:- The claim of the assessee is based on the trial run of the equipments before putting them for commercial use. And as find that the documents which were submitted before the lower authorities clearly show that the assets were put to test run before the close of the financial year under consideration. Thus as decided in ACIT vs. Ashima Syntex Ltd. (2000 (8) TMI 22 - GUJARAT HIGH COURT) that on trial run of machinery assessee is entitled to depreciation - it is not in dispute that the assets had been acquired by the assessee during the previous year and is put to use for the purposes of business or profession and as the assets have been put to use for less than 180 days, the assessee has rightly claimed depreciation @ 50% of the allowable rate of depreciation - in favour of assessee. Depreciation on the ownership of Flag Project - Direction of the CIT(A) to allow depreciation disallowed by AO as assessee is not a complete owner of the asset which is in the form of cable network and owned by a consortium of number of operators - Held that:- The words “wholly” or “partly” have been inserted in Section 32 with effect from 14.4.1997 and as such, the assessee is eligible to claim depreciation on the cable network even though the entire network is not owned by it. The CIT(A) concluded that the assessee is clearly entitled to claim the depreciation and directed the Assessing Officer to allow depreciation accordingly - in favour of assessee.
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