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The Deputy Commissioner of Income-tax, Circle-4, Ahmedabad Versus GMM Pfaulder Ltd,

Disallowance of assessee’s claim in respect of its liquidated damages - CIT(A) deleted the addition - Held that:- A coordinate bench in assessee’s appeal [2011 (2) TMI 1351 - ITAT AHMEDABAD] directed the Assessing Officer to allow the assessee’s claim on actual basis and that wherever the other party had claimed liquidated damages in current assessment year, it would be allowed. It was further of the view that the assessee has to submit individual account of its customers as per law. The assesse .....

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in the nature of a provision. This voluminous evidence was nowhere even adverted to. The Revenue’s second argument quoting lack of evidence also stands rejected because of the sufficient supportive material regarding the impugned claim of liquidated damages.

Revenue argument that these liquidated damages are only in the nature of a provision is unacceptable as we find that the CIT(A) on this issue has followed similar orders passed in earlier assessment year in assessee’s own case on .....

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89-90,90-91 have already decided the very issue in assessee’s favour. The Revenue fails to point out any distinction on facts. - Decided in favour of assessee. - ITA No. 798/Ahd/2013 - Dated:- 20-8-2015 - Shri G. D. Agrawal, Vice President and Shri S. S. Godara, Judicial Member For The Revenue : Shri Dinesh Singh, Sr. D.R. For The Assessee : Shri S. N. Soparkar, A.R. ORDER PER : S. S. GODARA, JUDICIAL MEMBER:- This Revenue s appeal for block assessment period from 01.04.1986 to 27.02.1997, arise .....

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on stood debited being only a provision for expected further expenditure. 3. The assessee filed appeal. The CIT(A) has accepted its claim as follows:- 4.3. The learned A.R. has submitted the submission in this regard is as under:- The assessee has furnished the complete details of liquidated damages to its customers for late delivery of goods. Such damages are payable for breach of contractual terms in respect of delivery of goods. From the details submitted, it may be observed that the assessee .....

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epresent the compensation against late delivery of goods to the customers. The assessee has submitted copy of the purchase order in which penalty clause is there. The assessee has submitted the complete working of the liquidated damages for which provision is made. b). It is further submitted that liquidated damages is business loss incurred during course of business and provisions of section 36(1)(vii) of the Income tax Act, 1961 relating to deduction of bad debts are not applicable. The assess .....

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oods. It is business expenditure allowable u/s 37(1) of the IT Act, 1961. In case of the assessee in past such expenditure has been allowed by Hon'ble ITAT, Ahmedabad in respect of Assessment year 1984-85, 1986-87, 1987-88, 1988-89, 1989-90, 1990-91. In assessee's own case in assessment year 1989-90 and 1990-91 the assessing officer had accepted the contention of the assessee and allowed the provision for bad debts representing liquidated damages. The learned A.R. relied upon the decisio .....

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ngs of the A.O. 'that the appellant has not furnished any evidences from which it can be established that the appellant has debited an amount of ₹ 26,76,000/- towards liquidated damages, is not correct. As per direction of The Hon'ble Income Tax Appellate Tribunal, the appellant has submitted the individual accounts of parties along with contracts and the relevant invoices before the AO and before the undersigned. On verification of the same it is found that the liquidated damages .....

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ent year 1984-85, 1086- 87, 1987-88, 1988-89 1989-90 and 1990-91. Therefore, in view of the directions of the ITAT and following the findings of the ITAT in the appellant's case in earlier years, I hold that provision for liquidated damages is allowable expenditure in this year and the A.O. is directed to delete the addition of ₹ 26,76,000/-. 5. Ground no 4 relates to addition of ₹ 26,76,000/- in computation of income, though the same was added in the return of income. 5.1. The a .....

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it is found added in computation of income with return of income. 4. We have heard both the parties and gone through the case file. The Revenue refers above stated backdrop of facts and inter alia argues that the assessee ought to have filed a revised return, its claim was only in the nature of a provision and no substantive evidence was led in support of these liquidated damages. The assessee strongly supports the CIT(A) s appeal order. This is second round of proceedings in the tribunal. A coo .....

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