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TMI Blog2016 (4) TMI 1096X X X X Extracts X X X X X X X X Extracts X X X X ..... ent year 2009-10 on 22.9.2009 declaring a total income of Rs. 92,74,12,634/-. The case was selected for scrutiny and accordingly, notices u/s 143(2) and 142(1) of the Income-Tax Act, 1961 (hereinafter called as 'the Act') were issued. In response to notice, the authorized representative of the assessee appeared from time to time and furnished books of accounts and other information. During the course of assessment proceedings, the A.O. noticed that the assessee has claimed an amount of Rs. 77,40,470/- towards liquidated damages towards breach of contract and debited to the P&L account. Therefore, issued a show cause notice and asked to explain the nature of expenditure claimed in the profit & loss account with necessary details. In response ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the CIT (A) was erred in deleting the additions made by the A.O. towards liquidated damages, by relying upon the ITAT, special bench decision in assessee's own case for the assessment year 1982-83. The Ld. D.R. further submitted that though the ITAT, allowed the claim of liquidated damages in assessee's own case, the department has not accepted the order of ITAT and the same has been challenged before the Hon'ble A.P. High Court and the case is pending for adjudication. Since, the issue has not reached the finality, the CIT(A) was not correct in deleting the addition made by the A.O. Therefore, requested to uphold the assessment order. 5. On the other hand, the AR of the assessee strongly supported the order of the CIT(A) and argued that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt years. We have examined the case laws relied upon by the assessee in the light of the facts of the present case and find that the issue i.e. liquidated damages for breach of contract is held in favour of the assessee in assessee's own case in earlier assessment years. The relevant portion is reproduced hereunder: "7. The next issue in the appeal relating to the assessment year 2000-01 relates to the disallowance of liquidated damages. The assessee made a provision of Rs. 2,96,006/- towards liquidated damages. The AO was of the view that the liability to pay liquidity damages would arise only on completion of the contract. Accordingly, the AO verified the details of contract and identified that the liability towards the liquidity damag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the point of breach and at that point of time, the liability accrued and hence the provision for liquidated damages was to be allowed as deduction. Since the Ld CIT (A) has followed the decision of the special bench of the ITAT, we do not find any reason to interfere with his decision." 6. Considering the facts and circumstances of the case and also applying the ratios of the coordinate bench of this Tribunal, we are of the opinion that the CIT(A) rightly deleted the addition. We do not find any error or infirmity in the order of CIT(A). Therefore, we direct the A.O. to delete the additions made on account of liquidated damages and upheld the CIT(A) order. 7. In the result, the appeal filed by the revenue is dismissed. 7. Considerin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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