TMI Blog2015 (10) TMI 245X X X X Extracts X X X X X X X X Extracts X X X X ..... re 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n in deleting the addition made on account of performance related pay provisions of ₹ 1,77,87,000/- to directors and staff. 3. Facts giving rise to the present appeal are that the assessee is engaged in the business of credit rating, consultancy and information services. During the year under consideration, assessee has made provisions for expenses of ₹ 1,77,87,000/-. The AO asked the assessee to explain and tabulate all the provisions made under all/any heads of expenses, however, being not satisfied with the explanation of the assessee, the AO disallowed the same on the plea that the assessee has not furnished any evidence in regard to accrual of such expenses. 4. Being aggrieved with the assessment order, the assessee a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot been raised but liability was incurred. It was stated by the appellant that this is the accounting system they have been following always. At the end of every year provision is made on estimated basis for liabilities which have crystallised during the year, however bills when received are paid and the excess provisions are reversed back and offered for tax. It has been admitted by the appellant that the provisions are made on estimated basis but it has also been emphasised that they are crystallised liabilities and therefore should be allowed as a deduction to the appellant. It has been stated that these are not contingent liabilities. The appellant pointed out that the AO has not disputed the fact that the PRP paid pertain to Financial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said Director for Financial Year 08-09 in terms of the scheme approved by the Board. As per the bank statement submitted it is seen that the payment was made on 24/7/09 after deducting TDS i.e. after the approval received from the Board. I find none of these documents have been disputed by the Assessing Officer regarding their contents. Accordingly, taking into cognizance the submissions made by the appellant, 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 appellant 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3(AY 2000-01), order dated 13-11-2006, wherein exactly similar disallowance was deleted by the Tribunal. 7. We have considered the rival submissions of counsel for both the parties on either side and gone through the material and evidence available on records. The case of the revenue is that the addition so made by the AO should not be deleted by the CIT(A). 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 rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was having exact details of expenses then it could have quantified the expenses. It has made the provision because it was difficult to quantify the expense with supporting details. Thus n our opinion the assessee made the provision on a bona fide belief, while setting off the provision with the actual, certain amounts resulted to be excess. The moment such excess amount resulted assessee has returned it back and offered it for taxation. If this amount is disallowed here then it will be taxed twice, once in this assessment year and again in the year in which assessee has offered it. Whenever any provision is made for the expenses some plus and minus is possible because provision cannot be made with exactness. As far as the other aspect is co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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