TMI Blog2006 (9) TMI 341X X X X Extracts X X X X X X X X Extracts X X X X ..... ims which had been upheld by the Tribunal. 2. The facts of the case in brief are that the assessee for the relevant year had claimed a deduction of Rs. 27.55 crores debited in the Profit Loss account as provision in respect of 1/3rd of total estimated liability relating to unidentified claims known as orphan claims. In respect of such liabilities, the assessee had received only court summons, which did not contain adequate policy particulars so as to establish that the claim related to the assessee-company. The provision for 1/3rd total such liabilities had been made purely on estimate. The assessee had claimed that these liabilities had arisen during the year and the deduction was allowable even if the liabilities were to be quantifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... closed by the annual accounts copies of which are required under the Insurance Act, 1938 (4 of 1948) to be furnished to the Controller of Insurance subject to the following adjustments : a. Subject to other provisions of this rule, any expenditure or allowance which is not admissible under the provisions of sections 30 to 43A in computing the profits and gains of business shall be added." 2.1 The Hon'ble Supreme Court in the case of General Insurance Corpn. of India ( supra ) held that the provision in respect of redemption of preference shares was expenditure only for the purpose of Insurance Act and not for the purpose of Income-tax Act. For an expenditure to be allowable under the provisions of Income-tax Act, 1961, it should be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame had to be added to the profit of business under rule 5( a ) of Part B of the First Schedule. 3. The assessee has filed the present miscellaneous application against the aforesaid decision of the Tribunal pointing out that the decision is contrary to the judgment of Hon'ble Supreme Court in case of General Insurance Corpn. of India ( supra ) and, therefore, constitutes a mistake apparent from record. The finding of the Tribunal that the judgment in case of General Insurance Corpn. of India ( supra ) is distinguishable is an apparent mistake. 4. Before us, the Ld. A.R. for the assessee Shri M.S. Syali argued that the Tribunal in its order dated 28-10-2005 had itself held that incurring of the liabilities was not certain and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... res is on capital account and is therefore not of the nature of expenditure/allowance contemplated under sections 30 to 43A. It was because of this reason that the Hon'ble Supreme Court observed that the provision for redemption of preference shares was also not an expenditure or allowance of the nature covered under sections 30 to 43A of the Income-tax Act, 1961. This is not so in the case of the assessee. The provisions towards any liability in respect of any insurance claim, is a normal expenditure or allowance contemplated under sections 30 to 43A. Though it is true that it will not be an item of expenditure as the liability was not existing, but definitely it will be covered under the term 'allowance'. The word allowance mentioned in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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