TMI Blog2015 (12) TMI 289X X X X Extracts X X X X X X X X Extracts X X X X ..... ing fails. A perusal of the case file reveals that the assessee filed all details of liquidated damages in question in the shape of individual ledger accounts from 01- 04-2002 to 31-03-2003. The same contain certification as per rules to have been filed in the course of assessment. The Assessing Officer still quoted lack of evidence and held that this claim was only 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de by the Assessing Officer in assessment order dated 10-10-2011 after holding that there was no evidence furnished establishing that the sum in question 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 is liable for liquidated damages for late delivery of goods. The assessee has sold g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se 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 decision of Pune ITAT in case of Thermax Babcock Wilcox Ltd reported in 7 DTR (Pune)(Trib) 162. In the said decision it is held that provision for liquidated damages, once an assessee is maintaining its accounts as per mercantile system, any liability which has accrued in a year, though to be discharged at future date, would be a pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 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 appellant has submitted that as discussed above the appellant himself has added provision for liquidated damages in the statement of total income and had claimed deduction by way of letter. Therefore, though the A.O. has not accepted the claim of the appellant no separate addition is called for. 5.2. I have gone through the assessment order and the submission of the appellant. I found that the contention of the learned A.R. is correct and therefore, the A.O. is directed to delete the addition if it is found added in computation of income with return ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent quoting lack of evidence also stands rejected because of the sufficient supportive material regarding the impugned claim of liquidated damages. 6. This leaves us with the Revenue s third and final argument that these liquidated damages are only in the nature of a provision. We find that the CIT(A) on this issue has followed similar orders passed in earlier assessment year in assessee s own case on the very issue. It has come on record that these claims have arisen from late delivery of goods beyond the specified period in the relevant previous year. The assessee passed these amounts in the books after ascertaining the claim in case of each customer. We find that the Assessing Officer himself in a consequential order dated 26-03-2003 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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