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2016 (7) TMI 1465 - HC - Income TaxProvision towards liability for damaged goods - ITAT deleted the additions - Held that:- It is required to be noted that there is a change in the method of accounting employed during the years under review from that of employed in the immediately preceding year. We have also considered the Government Notification No. 9949 dated 25.01.1996 whereby certain accounting standards for assessees following mercantile system of account have been made compulsory from A.Y. 1997-98 and find that the case of the assessee is covered by the same. The Apex Court in the case of Rotork Controls India (P.) Ltd (2009 (5) TMI 16 - SUPREME COURT OF INDIA) observed that a provision is a liability which can be measured only by using a substantial degree of estimation and that a provision is recognized when (a) an enterprise has a present obligation as a result of a past event; (b) it is probable that an outflow of resources will be required to settle the obligation and (c ) reliable estimate can be made of the amount of the obligation. The Apex Court observed that if these conditions are not met, no provision can be recognized. - ITAT rightly deleted the additions - Decided against the revenue.
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