9911796707
TMI Blog2018 (11) TMI 380X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer on what has been termed as provision for contract loss. 2. Facts apropos are that assessee a company engaged in real estate and property development had filed its return of income for the impugned assessment year disclosing income of Rs. 8,54,06,673/-. During the course of assessment proceedings, it was noted by the ld. Assessing Officer that assessee had created a provision of Rs. 1,35,05,446/- against contract loss. Ld. Authorised Representative of the assessee through a letter dated 13.3.2015 filed with the ld. Assessing Officer stated that such provision was created considering arbitration proceedings filed by one M/s. Garabandal Constructions Pvt. Ltd against it. Ld. Assessing Officer however was of the opinion that provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 28,40,000 1,60,61,000 1,32,21,000 ----- 1,60,61,000 1,60,61,000 As per the assessee, M/s. Garabandal Constructions Pvt. Ltd. had filed a petition u/s.11(6) of the Arbitration and Conciliation Act, 1996 before the Hon'ble Madras High Court on 19.03.2013. Contention of the assessee was that the sole arbitrator through his order dated 25.01.2016 approved a joint settlement memo, between assessee and M/s. Garabandal Constructions Pvt. Ltd, whereby assessee agreed to pay a sum of Rs. 75,00,000/- in final settlement. Further, as per the assessee a sum of Rs. 55,00,000/- out of the total provision was rental compensation payable to the customers on account of delayed delivery of flats. 4. Ld. Commissioner of Income Tax (A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , before the ld. Commissioner of Income Tax (Appeals) assessee gave a completely different break-up of the provision. According to the ld. Departmental Representative, ld. Commissioner of Income Tax (Appeals) had accepted the fresh claim without verifying the facts. Contention of the ld. Departmental Representative was that there was no evidence filed by the assessee with regard to provision for rental compensation of Rs. 55,00,000/-. As for the liability of Rs. 70,00,000/- shown as payable to M/s. Garabandal Constructions Pvt. Ltd, contention of the ld. Departmental Representative was that there was no crystallization of any such dues but it was only a wishful estimate. In any case, as per ld. DR, ld. Commissioner of Income Tax (Appeals) h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paper book pages 38 to 42 which put the final amount payable by the assessee as Rs. 75,00,000/-. Thus, according to him, ld. Commissioner of Income Tax (Appeals) had rightly considered the sum of Rs. 70,00,000/- as ascertained liability payable to M/s. Garabandal Constructions Pvt. Ltd on 31.03.2012. In so far as rental compensation was concerned, ld. Authorised Representative submitted that assessee was obliged to pay such compensation due to delay in handing over the flats to its customers. This also as per the ld. Authorised Representative was a crystallized liability. Thus, according to him, ld. Commissioner of Income Tax (Appeals) was justified in allowing the claim to the extent of Rs. 1,25,00,000/- 7. We have considered the rival c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e project. The question before us is whether these amounts were crystallized liability as on 31.03.2012. Application for appointment of Arbitrator was filed by M/s. Garabandal Constructions Pvt. Ltd on 1st day of July, 2013. No doubt in the said application, it is stated that M/s. Garabandal Constructions Pvt. Ltd had submitted its final bills valued at Rs. 7,44,54,318/- as on 07.12.2011 against which they claimed receipt of Rs. 6,38,26,100/- only. Relevant paras of the application is reproduced hereunder:- ''9. The petition submits that the final bills were submitted for the value of the Rs. 7,44,54,318.60/- on 07.12.2011 and the final bill for the external work for the value of Rs. 34,36,003.42/- submitted on 4th June 2012. Thus the tot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was issued by the respondent on 19.03.2013 and the reply was sent by the petitioner requesting for the appointment of arbitrator ,on21.03.2013 and the respondent on 30.04.2013 sent a rejoinder stating that he is ready to face the arbitration proceedings''. There is nothing on record to show that M/s. Garabandal Constructions Pvt. Ltd had preferred any such claim on the assessee during the course of the relevant previous year or to show that assessee had agreed to such claim. On the other hand assessee had claimed liquidated damages from M/s. Garabandal Constructions Pvt. Ltd. No doubt, on 19.01.2016, there is a settlement entered by the assessee with M/s. Garabandal Constructions Pvt. Ltd whereby it agreed to pay a sum of Rs. 75,00,000/- ..... X X X X Extracts X X X X X X X X Extracts X X X X
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