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2015 (8) TMI 978 - AT - Income TaxExpenditure claimed under the head “provision towards SOBM and drill cutting disposal expenses” disallowed - CIT(A) deleted disallowance and held that the provision so made by the assessee is in the nature of ascertained liability and same is deductible both under the normal provisions of the Act and also while computing the book profit under section 115JB of the Act. - Held that:- In the present case, the undisputed fact remains that the contract receipts cannot be considered to be free money available with the assessee, since there is obligation to discharge the responsibility to process the waste materials. Hence the gross contract receipts cannot considered to be the net income of the assessee, i.e., the income arising from the said contract alone can be brought to tax, in which the corresponding expenditure is required to be allowed as deduction. Hence the liability to process the materials constitute ascertained liability in praesenti and hence the assessee is justified in providing for those expenses in order to arrive at the net profit. In respect of liability already accrued, the actual date of incurring of expenses is irrelevant and hence the payment could be postponed in subsequent years. Even otherwise, it is submitted that the assessee has reversed the provision in the immediately succeeding year, i.e., the said provision is offered as income in the succeeding year in the form of reduction of corresponding expenditure. As observed by Hon’ble Supreme Court in the case of Excel Industries Ltd. (2013 (10) TMI 324 - SUPREME COURT ), accounting policy adopted by the assessee is tax neutral in nature, No infirmity in the order of the ld CIT(A) on this issue and, accordingly, we uphold the same. - Dcided against revenue.
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