TMI Blog1992 (7) TMI 35X X X X Extracts X X X X X X X X Extracts X X X X ..... lowing question has been referred by the Tribunal to this court for its opinion for the assessment year 1972-73: "Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in holding that the claim of the assessee-company for deduction of Rs. 3,16,061 on account of demand made by the Director-General of Supplies and Disposals for failure of the assessee to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sult of what was described by the Director-General of Supplies and Disposals as repurchase amounted to Rs. 3,16,061 which was demanded from the assessee-company by a letter of the Director-General of Supplies and Disposals dated January 13, 1971. This was not accepted by the assessee-company and the matter was, therefore, referred to arbitration and the arbitration proceedings were still pending. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . According to the Revenue, since arbitration proceedings were still pending, the claim of the assessee-company for deduction of Rs. 3,16,061 as business loss was clearly premature. The Tribunal, however, held and observed that the demand of Rs. 3,16,061 made against the assessee-company by the Director-General of Supplies and Disposals for non-fulfilment of the contract by the assessee-company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Disposals have no bearing on the issue whether the liability pending adjudication could be an accrued liability. While describing the claim as not flimsy and frivolous, the Tribunal only refers to a chance of the claim turning out as a liability in the final outcome of the arbitration. In CIT v. Roberts McLean and Co. Ltd. [1978] 111 ITR 489, this court held that the expression " profits and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contract, it appears to us that, until the award is delivered by the arbitrator, the liability of the assessee-company was nothing but contingent. In that view of the matter and following the decision of this court in CIT v. Roberts McLean and Co. Ltd. [1978] 111 ITR 489, we answer the question referred in this case in the negative and in favour of the Revenue.There will be no order as to costs. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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