TMI Blog2021 (10) TMI 1388X X X X Extracts X X X X X X X X Extracts X X X X ..... . No material was placed on record before the Tribunal. We are of the opinion that the provision made by the assessee for a loss on contract is not an ascertained liability and it is a simple provision made by the assessee which is not allowable u/s 37. So far as case law placed by the assessee are concerned, the decision in the case of Rotork Controls India Limited. [ 2009 (5) TMI 16 - SUPREME COURT] has no application to the facts of the present case. In the order passed by the Tribunal for the AY 2005-06 dated 03.08.2017, the issue dealt by the ITAT relates to provision of warranty and therefore, in our opinion, the issue under consideration need not be remitted back to the Assessing Officer. In view of the above, the ground raised by the assessee is dismissed. Provision made in respect of various expenditures - HELD THAT:- The assessee has made a provision - However, no explanation was given before the Assessing Officer. Even before the ld. CIT(A), the assessee has not given any explanation the reason for making such provisions of expenses. Even before us, the assessee has not been able to explain the reason for making such provisions. We are of the opinion that the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Income Tax Act. The ld. Counsel for the assessee Shri G. Baskar has submitted that this ground of appeal is not pressed and prayed that the same may be dismissed. Accordingly, as per the request of the ld. Counsel for the assessee, this ground raised by the assessee is dismissed. 3. Ground Nos. 2.1 to 2.3 relates to provision of estimated loss of ₹.1,14,45,495/- on contracts. The assessee is in the business of manufacturing and supply of machinery parts, cement / mineral industries. For the assessment year 2011-12, the assessee has made a provision of estimated loss on contracts and the same was disallowed by the Assessing Officer. In the assessment order, the Assessing Officer has noted as under: Provision for estimated loss of contracts : As per Schedule 12 to the financials, Rs.4,38,99,923 has been created as a provision for estimated future losses on contracts. Vide the notice u/s.142(1) dated 05.02.2015, the assessee was asked to justify the claim. Vide letter dated 24.02.2015, the assessee stated as follows: Para 21 of AS-7 stipulates that when the outcome of a construction contact can be estimated reliably, contract revenue and contract costs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... demonstrate its applicability to the facts and circumstances of its own case. With the above observations, the ld. CIT(A) confirmed the order of the Assessing Officer. 5. On being aggrieved, the assessee is in appeal before the Tribunal. Before us, the ld. Counsel for the assessee has submitted that the loss estimated by the assessee is an ascertained liability and submitted that simply because the loss is estimated, it cannot be said that it is an unascertained liability. In his gist of submissions, the ld. Counsel for the assessee has submitted that in assessee s own case in earlier assessment year 2005-06 vide order in I.T.A. No. 1697/Mds/2015 dated 03.08.2017, the Tribunal remitted the matter back to the file of the Assessing Officer to consider afresh and accordingly, he prayed that the same may be followed and remit the matter back to the file of the Assessing Officer. 6. On the other hand, the ld. DR has submitted that there is no provision in the Act to estimate the ascertained liability and make a provision for it and therefore, pleaded that the Assessing Officer as well as ld. CIT(A) have rightly disallowed the same and strongly supported the order passed by the au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of Rotork Controls India Limited v. CIT (supra) has no application to the facts of the present case. In the order passed by the Tribunal for the AY 2005-06 dated 03.08.2017, the issue dealt by the ITAT relates to provision of warranty and therefore, in our opinion, the issue under consideration need not be remitted back to the Assessing Officer. In view of the above, the ground raised by the assessee is dismissed. 9. Ground No. 3.1 and 3.2 are relating to provision made by the assessee in respect of various expenditures. In the assessment order, the Assessing Officer has noted that the assessee has created provision for various expenses, such as, administrative expenses provision of ₹.8,00,000/-, consultancy expenses provision of ₹.30,99,292/- and provision for Zambia branch expenses of ₹.9,54,127/-. The assessee has not given any explanation before the Assessing Officer. Therefore, the Assessing Officer disallowed the entire provisions for various expenditures. Before the ld. CIT(A), the assessee has not been able to establish that the liabilities are ascertained liabilities and not only that the basis for making such provisions for expenses were not exp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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