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2022 (4) TMI 536 - AT - Income TaxAddition in respect of write off on deferred sales treated as contingent liability on account of bank guarantee - AO held that this amount in question was nothing but a contingent liability based on Auditors’ observations given in Form 3CD - HELD THAT:- We find that the AO and the CIT(A) both have proceeded with wrong observations of the tax auditor given in the TAR (Tax Audit Report), which when corroborated with the claim made in the audited financial statement deserves to be deleted. The correct position on the claim made by the assessee is reflected in the audited financial statement forming part of the paper book, wherein it has claimed it as write off in respect of deferred sales relating to retention money on the invoices raised by it on various electricity companies. It is not the case of claim of contingent liability debited to the P & L account as held by the authorities below. In view of appraisal of correct facts as oozing out from the material on record, we are inclined to delete the disallowance made by the ld. AO and confirmed by the ld. CIT(A). Accordingly, the appeal of assessee is allowed.
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