TMI Blog2008 (2) TMI 383X X X X Extracts X X X X X X X X Extracts X X X X ..... he claim on the ground that liability arose under the agreement approved by the Government in the succeeding year. - Held that deduction allowed as claimed by the assessee on the ground that by the time the accounts were finalised and returns were filed, the assessee had ascertained the actual liability attributable to the previous year and therefore the actual amount payable only was claimed based on mercantile system of accounting followed by the assessee. - ITA.No. 216 of 2001 - - - Dated:- 4-2-2008 - For Petitioner :SRI.P.K.R.MENON(SR.),SR.COUNSEL FOR IT For Respondent :SRI.P.BALACHANDRAN The Hon'ble MR. Justice C.N.RAMACHANDRAN NAIR The Hon'ble MR. Justice T.R.RAMACHANDRAN NAIR O R D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vernment in the succeeding year, is liability of the previous year and hence allowable. It is against this order of the Tribunal, the Revenue has filed appeal. 2. We have heard learned Standing Counsel appearing for the Revenue and Shri P. Balachandran, learned Senior counsel appearing for the respondent assessee. Learned Standing Counsel referred to the decision of the Calcutta High Court in Commissioner of Income Tax v. Teesta Valley Co. Ltd. (187 I.T.R. 657) and the decision of the Bombay High Court in Tyresoles Goa Pvt. Ltd. v. Commissioner of Income Tax (193 ITR 649) and contended that the liability in this case is contingent in nature and therefore not an admissible deduction. The assessee on the other hand, relied on the decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no exception to it. What is important is not the date of signing the agreement nor the later approval granted by the Government, but the effective date of commencement of the wage revision under the agreement. There is no dispute that the wage increase was granted as a continuous measure from the date of expiry of the previous settlement, i.e. with effect from 1.8.1992. Therefore, the liability for wage increase really accrued for the respondent- assessee with effect from 1.8.1992. The assessee is entitled to claim deduction of such wage increase attributable upto the end of the previous year, no matter exact amount was ascertained and payment made later. In the decision of the Supreme Court referred to above, it is made very clear that wha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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