TMI Blog2005 (1) TMI 59X X X X Extracts X X X X X X X X Extracts X X X X ..... as above, in the affirmative, in favour of the Revenue and against the assessee. - - - - - Dated:- 19-1-2005 - Judge(s) : M. H. S. ANSARI., T. CH. SURYA RAO. JUDGMENT The judgment of the court was delivered by M.H.S. Ansari J.- This is a reference at the instance of the assessee. The question framed by the Tribunal for our consideration, arising out of its orders in I.T.A. No. 1638/Hyd of 1990, pertaining to the assessment year 1988-89, is as under: "On the facts and in the circumstances of the case, whether the Tribunal is correct in law in its finding that the amount of Rs. 7,85,725 provided by the assessee as an accrued liability is contingent liability and hence not an allowable deduction?" The facts relevant for the purpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a provision for future loss and not an expenditure incurred during the accounting year relevant to the assessment year. The assessee carried the matter in appeal. The appellate authority, i.e., the Commissioner of Income-tax (Appeals), confirmed the view taken by the Income-tax Officer and sustained the disallowance, holding, inter alia, that the liability accrues only after the scheme is completed. As long as the liability is not foisted on the assessee, any provision created to meet that liability cannot be allowed. The assessee carried the matter in appeal before the Tribunal. One of the contentions raised before the Tribunal on behalf of the assessee was that the liability of the assessee to pay the extra amount or bonus amount to each ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was no guarantee as to how many members continue to be subscribers to the scheme and how many members will remain in the scheme till the end. Having considered the conclusions and findings arrived at by the Tribunal, we are of the view that in the case on hand the Tribunal has rightly come to the conclusion that no liability had accrued in the previous year relevant to the assessment year in question and as no liability has accrued, the same is a contingent liability. It is not a case where the liability has accrued and the payment is postponed. Accordingly, we answer the question posed as above, in the affirmative, in favour of the Revenue and against the assessee. Reference is answered accordingly. - - TaxTMI - TMITax - Income T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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