TMI Blog2023 (8) TMI 591X X X X Extracts X X X X X X X X Extracts X X X X ..... ny waivers or remissions. The issue which the Tribunal had to grapple with, and clearly return a finding, one way or the other, was whether the said amount in the given facts and circumstances of the case, represented an ascertained liability. Given this position, both counsels agree that the matter can be remanded to the Tribunal, with a direction to dispose of the matter based on the documents already on record. The impugned order is set aside - Tribunal will reexamine the issue based on the material already on record and return a finding, one way or the other, as to whether such amount represented an ascertained liability. - HON'BLE MR. JUSTICE RAJIV SHAKDHER AND HON'BLE MR. JUSTICE GIRISH KATHPALIA For the Appellant Through: Mr Ruchir Bhatia, Sr Standing Counsel with Ms Deeksha Gupta, Adv. For the Respondent Through: Mr Deepak Chopra, Adv. RAJIV SHAKDHER, J.: (ORAL) 1. This appeal concerns Assessment Year (AY) 2004-05. 2. Via the aforesaid appeal, the appellant has sought to assail the order dated 31.01.2018 passed by the Income Tax Appellate Tribunal [in short, Tribunal ]. 3. A perusal of the appeal would show that the following ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he submissions of assessee that revenues and liabilities are capable of being estimated with reasonable level of certainty. Hon'ble Supreme Court in the case of Rotork Controls India (supra) has held that a provision is recognised when an enterprise has a president obligation as a result of past event; that is it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate can be made on the amount of the obligation. If these conditions are not met no provision could be recognised. 18. Although the Ld. CIT (A) pointed out that obligation has to be seen on the basis of assurance given by assessee on in respect of services agreed to have been rendered by assessee under the contract, Ld. CIT (A) has failed to take it to the logical end while granting the relief. 19. We are therefore inclined to send this issue back to the file of Ld. CIT (A) to verify from the contracts, whether the parameters laid down by the Hon'ble Supreme Court in the case of Rotork Controls India (supra) has been fulfilled. Ld. CIT (A) is directed to analyse this issue on the basis of the terms of agreement between assessee and its customer and to gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e issue. 9. It is in this backdrop that the impugned order came to be passed. 10. Mr Deepak Chopra, who appears on behalf of the respondent/assessee submits that the only issue which arose before the Tribunal was: whether the provision made for liquidated damages represented an ascertained liability? In this context, Mr Chopra has drawn our attention to the chart which is appended on page 146 of the case file. For the sake of convenience, the details given in the chart are extracted below: Movement of Provision of Liquidated Damages Assessment Year Opening Balance Creation during the year Utilization Release/ Written back Closing Balance Debited to P/L AY 2004- 05 135,314,238 196,651,910 20,452,238 311,513,910 176,199,672 AY 2005- 06 311,513,910 29,602,855 4,643,188 110,046,185 226,427,392 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated damages was pegged at 0.5% of the value of the delayed supply for each week of delay, or part thereof for the period up to 10 weeks, and thereafter, the rate would stand enhanced to 0.7% of the value of the delayed supply for each week of delay or part thereof for another 10 weeks of delay. [Clause 15.2 of the contract executed between the respondent/assessee and BSNL captures this aspect of the matter]. (iii) The AO disallowed the provision amounting to Rs. 17,61,99,671/-, which was the difference between the provision created during the year i.e., Rs. 19,66,51,910/- and the amount actually utilized i.e., Rs. 2,04,52,238/-; although the actual difference is Rs. 17,61,99,672/-. According to the AO, the said amount i.e., Rs. 17,61,99,671/- represented unascertained liability. (iv) The CIT(A), via the order dated 26.02.2014, reversed this view, which, as indicated above, was, in turn, overturned by the Tribunal, in the first round, via order dated 30.06.2017. (v) The Tribunal, upon remand by a coordinate bench of this court via the order dated 23.11.2017, re-examined the matter. While re-examining the matter, the Tribunal noted in extenso the order of the CIT(A) p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 17,61,99,672/- represents an ascertained liability, which could change if there are any waivers or remissions. 16. The issue which the Tribunal had to grapple with, and clearly return a finding, one way or the other, was whether the said amount i.e., Rs. 17,61,99,672/-, in the given facts and circumstances of the case, represented an ascertained liability. 17. Given this position, both counsels agree that the matter can be remanded to the Tribunal, with a direction to dispose of the matter based on the documents already on record. 17.1 It is ordered accordingly. 18. The impugned order is set aside. 18.1 The Tribunal will reexamine the issue based on the material already on record and return a finding, one way or the other, as to whether Rs. 17,61,99,672/- represented an ascertained liability. 19. Needless to add, the Tribunal will confine itself only to this aspect of the matter i.e., the aspect concerning liquidated damages. 20. Counsel for the parties will appear before the Tribunal on 28.08.2023. 21. We request the Tribunal to dispose of the matter as expeditiously as possible, though not later than eight (8) weeks from the date of receipt of copy of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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