TMI Blog2016 (7) TMI 1465X X X X Extracts X X X X X X X X Extracts X X X X ..... d that a provision is a liability which can be measured only by using a substantial degree of estimation and that a provision is recognized when (a) an enterprise has a present obligation as a result of a past event; (b) it is probable that an outflow of resources will be required to settle the obligation and (c ) reliable estimate can be made of the amount of the obligation. The Apex Court observed that if these conditions are not met, no provision can be recognized. - ITAT rightly deleted the additions - Decided against the revenue. - TAX APPEAL NO. 1298 of 2008 With TAX APPEAL NO. 1758 of 2009 With TAX APPEAL NO. 1759 of 2009 With TAX APPEAL NO. 843 of 2014 With TAX APPEAL NO. 726 of 2010 - - - Dated:- 7-7-2016 - MR. KS JHAVERI AND M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons made for damaged goods for the current year and ₹ 25,95,833/- being short provision for damaged goods related to earlier years? Tax Appeal No. 1758 of 2009 Whether the Appellate Tribunal is right in law and on facts in confirming the order passed by CIT(A) deleting the disallowance of ₹ 1,50,73,636/- made by the Assessing Officer on account of liability for damaged goods? Tax Appeal No. 1759 of 2009 Whether the Appellate Tribunal is right in law and on facts in confirming the order passed by CIT(A) deleting the disallowance of ₹ 1,13,05,721/- made by the Assessing Officer on account of liability for damaged goods? Tax Appeal No. 843 of 2014 (A) Whether the appellate tribunal was right i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sideration. 4. Mr. Mehta has drawn the attention of this Court to the order of Assessing Officer so far as Tax Appeal No. 1298 of 2008 is concerned, and submitted that if the language and tenor of the order is seen, it can be understood that no contingency had arisen. The relevant portion of the assessment order reads as under: This liability has been ascertained as per the accounting policy adopted isnce A.Y. 1997-98 by virtue of Section 145(2) of the Act pursuant to which Notification has been issued by the Central Government making it mandatory from A.Y. 1997- 98 and subsequent assessment years. Whereby provision has to be made for all known liabilities and losses even though the amount cannot be determined with certainly and repre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e goods received back. So the incurring of loss is dependent upon the future events which would happen after any point of time from the end of the assessment year to after 2 to 3 years.... 5. Mr. Bandish Soparkar, learned advocate appearing for the assessee has drawn the attention of this Court to the observations made by the Tribunal and contended that for previous years as the same benefit was given to the assessee and after 01.04.1997 as the accounting system had changed the assessee had made a provision for damaged goods on the basis of past practice. He has relied upon the decisions in the following cases: (I) Rotork Controls India (P) Ltd. vs. Commissioner of Income Tax, Chennai reported in [2009] 180 Taxman 422 wherein para ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (i) disallowance of the provision made for the current years under appeal and (ii) disallowance of actual liability pertaining to earlier years. So far as the issue with regard to deletion of addition by the CIT(A) being the provisions made for damaged goods for the current year and earlier years, the Tribunal has proceeded on the basis of the assessee s own case in the previous years. The Tribunal has considered the fact that the issue is squarely covered by the decision of the Tribunal in assessee s own case for previous years, the facts being exactly identical in the case on hand also. 7. It is required to be noted that there is a change in the method of accounting employed during the years under review from that of employed in the im ..... X X X X Extracts X X X X X X X X Extracts X X X X
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