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2016 (7) TMI 1045 - HC - Income TaxAddition of outstanding electricity fuel surcharge which was an ascertained liability - Whether the expenditure on account of arrear fuel surcharges levied by Bihar State Electricity for provisions was made by the appellant in its profit and loss account is an ascertained and known liability but demand of which was made after close of the accounting year is allowable as business expenditure in the relevant assessment year under Section 37 of the Act? - Held that:- It appears that the CIT (Appeal) and the Assessing Officer and also the learned Tribunal laid stress on the fact that the bill was received in April, 1995. When the assessee maintains his books of accounts on mercantile basis, then he has to make provision for the liability already incurred irrespective of whether the bill was received. Nothing turns on the receipt of the bill. Supposing in a case no bill is received, can it be said that the liability has not been incurred ? Therefore, the ground assigned by the Assessing officer, CIT and the Tribunal is altogether untenable. In that view of the matter, the appeal is allowed. Both the questions are answered accordingly in favour of the assessee.
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