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2015 (10) TMI 245 - AT - Income TaxAddition made on account of performance related pay provisions to directors and staff - ascertained liability - CIT(A) deleted the addition - Held that:- We find from the order of the CIT(A) that the documents which were placed before the AO were not disputed by the AO, from which it is clear that the Director was entitled to performance related pay and as the actual amount had not been approved by the Board, the assessee had made provision for a crystallised liability and debited it in the P&L Account. As soon as the approval was received from the Board of Directors in the meeting held on 15th June 2009, the actual payments were made after deducting tax at source. From the above, it proves that the payment had to be made to the director, the liability had duly crystallised however, on non-availability of the approval it could not be quantified exactly. It is also seen that the payment made was exactly as per the provision made by the assessee. Under the circumstances, it stands that there is no reason for disallowing the expenses claimed regarding payment of PRP to the Director since records of the assessee show that they are bonafide expenses which was crystallised. Accordingly, we see no reason to interfere in the findings of the CIT(A). Apart from this, the issue of disallowance of provisions has already been decided by the Tribunal in assessee’s own case vide its order dated 13-11-2006 and also for the assessment year 2009-2010 wherein the Tribunal deleted the addition so made on the provisions for expenses. - Decided in favour of assessee.
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