TMI Blog2000 (9) TMI 231X X X X Extracts X X X X X X X X Extracts X X X X ..... MTC Jaipur and MMTC Yamuna Nagar, respectively. It was noticed by the AO from the audit report furnished by the assessee along with the return of income that there was a dispute between the assessee and MMTC regarding the amount of interest. It was also noticed by the AO that there was no settlement arrived at between the parties and the liability remained in dispute at the relevant time. He, therefore, considered the provisions of interest made by the assessee as not an ascertained liability but only a contingent liability and disallowed the same. The matter was carried before the CIT(A) who confirmed the said disallowance. Aggrieved by the same, the assessee is in appeal before us. 4. The learned counsel for the assessee submitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orders of the authorities below on this issue deserved to be upheld. 6. We have considered the rival submissions and also perused the material on record. It is observed that the assessee was under a contractual obligation to pay the interest to MMTC, Jaipur and MMTC Yamuna Nagar, on the loans/advances provided by the said party. It is also observed that this issue of payment of interest was disputed by the assessee by making representation through its association. It is further observed that the issue at the relevant time was not settled and the liability to pay interest remained in dispute. It is also observed that the auditor in his report specifically made the observation that tax was also not deducted from the said interest amount as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ta High Court observed that where the liability to pay any expenditure is under dispute, the same cannot be said to have arisen unless the dispute is adjudicated or settled between the parties. In Swadeshi Cotton Mills Co. Ltd. (1980) 15 CTR (All) 334 : (1980) 125 ITR 33 (All), the Allahabad High Court drew a distinction between the statutory liability and the liability based upon a contractual obligation and held that in the case of a statutory liability, the quantification or ascertainment cannot postpone the accrual thereof, but if the liability is based on a contractual obligation, it arises only when it is ascertained. 8. In the case of National Newsprint Paper Mills Ltd. vs. CIT 1977 CTR (MP) 234 : (1978) 114 ITR 172 (MP) involvin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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