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2016 (9) TMI 1603 - AT - Income TaxDisallowance of the provision of liquidated damages - AO disallowed this amount by holding that the liability to pay liquidated damages arises only on completion of contract and hence the same cannot be regarded as crystallized liability in the interregnum periods before the contracts are actually completed or fulfilled - HELD THAT - We find that the Ld. CIT(A) by following the assessee s own case 2010 (7) TMI 1201 - ITAT VISAKHAPATNAM directed the A.O. to delete the addition. We find that the Ld. CIT(A) by considering the entire facts and circumstances of the case and also by following the assessee s own case directed the A.O. to delete the addition. We find no infirmity in the order passed by the CIT(A). This ground of appeal raised by the revenue is dismissed. In the result the appeal filed by the revenue is dismissed.
Issues:
1. Disallowance of provision of liquidated damages in the assessment year 2010-11. Detailed Analysis: The appeal filed by the revenue challenged the order of CIT(A) regarding the disallowance of the provision of liquidated damages amounting to ?1,23,88,127 in the assessment year 2010-11. The assessing officer disallowed this amount on the grounds that the liability to pay liquidated damages arises only upon completion of the contract. The assessee contended that the issue was covered by previous Tribunal decisions in their favor for the assessment years 2001-02 to 2006-07. The CIT(A) directed the AO to delete the addition based on the assessee's own case and previous Tribunal decisions. The CIT(A) noted that the issue was similar to those decided in favor of the appellant in earlier years and directed the AO to delete the addition. The CIT(A) followed the Tribunal's order and confirmed the deletion of the addition, dismissing the revenue's appeal. In conclusion, the ITAT Visakhapatnam upheld the CIT(A)'s decision to delete the addition of the provision of liquidated damages in the assessment year 2010-11. The Tribunal found no infirmity in the CIT(A)'s order, as it was based on the assessee's own case and previous Tribunal decisions. Therefore, the appeal filed by the revenue was dismissed, and the addition was directed to be deleted.
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