TMI Blog2011 (1) TMI 85X X X X Extracts X X X X X X X X Extracts X X X X ..... Held that "The law is settled: if a business liability has definitely arisen in the accounting year, the deduction should be allowed although the liability may have to be quantified and discharged at a future date. What should be certain is the incurring of the liability. It should also be capable of being estimated with reasonable certainty though the actual quantification may not be possible. If these requirements are satisfied the liability is not a contingent one. The liability is in praesent though it will be discharged at a future date. It does not make any difference if the future date on which the liability shall have to be discharged is not certain." -The question of law is answered in favour of the assessee and against the departm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsofar as the first question is concerned, we feel the following facts are required to be taken note of: 3. The assessee had taken a credit facility from J K Bank Ltd ( the Bank‟ for short). On the closing balance of Rs.1,11,40,966/-, the assessee claimed that interest amounting to Rs.16,59,292/- as deduction on accrual basis. The Assessing Officer dis-allowed the interest claimed by the assessee. The CIT (Appeals) confirmed the order of the Assessing Officer. The said order was sustained by the Income Tax Appellate Tribunal ( ITAT for short). 4. The short ground on which the assessees claim of deduction of interest on accrual basis was disallowed is that since the Bank, which had loaned the amount, had already instituted a suit, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pport of his contention submitted that the deduction of accrued interest ought to be allowed as it was an ascertained liability. The mere fact that the liability is not quantified will not render it contingent. 6. We need not burden ourselves with the reasoning given by the authorities below as in our view this issue has been adequately dealt with by the Supreme Court in the case of Bharat Earth Movers v. Commissioner of Income Tax; 245 ITR 428. The Supreme Court has laid down the law on the subject as follows: "The law is settled: if a business liability has definitely arisen in the accounting year, the deduction should be allowed although the liability may have to be quantified and discharged at a future date. What should be certain i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r will ascertain the veracity of the statement made before us by the learned counsel for the assessee at the time of final assessment carried for the assessment year 1992-1993. 9. Insofar as the second question is concerned, it involves dis-allowance of expenses to the extent of Rs.50,000/- as against an amount of Rs.1,48,782/- claimed by the assessee. These expenses were claimed by the assessee on account of cartage, labour and sealing expenses. We notice that this claim of the assessee has been dis-allowed throughout. The CIT (Appeals) while dis-allowing a part of the expenses has stated as follows: "In the present case, it is also noticed that the assessee has fairly conceded that the part of the expenditure represented the disbursem ..... X X X X Extracts X X X X X X X X Extracts X X X X
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