2016 (9) TMI 161 - SCH - Income Tax

Provision for transit breakages - whether has a scientific basis or is contingent in nature and as such is not an allowable deduction while computing the total income of the Assessee? - Held that - We find no reason to entertain this Special Leave Petition, which is, accordingly, dismissed. As decided by HC 2015 (10) TMI 491 - DELHI HIGH COURT there is no reasonable scientific method adopted by the Assessees to estimate the transit breakages so as to justify creating of provision for such breakages. The provision would, in the circumstances, be a provision for a contingent liability and, therefore, in terms of the AS 29 ought not be recognised. The actual transit breakages as and when they occur are allowable as revenue expenditure in the accounting year in which such breakages occur.

Summary

The Supreme Court of India dismissed the Special Leave Petition in 2016 (9) TMI 161. Justices Kurian Joseph and Rohinton Fali Nariman found no reason to entertain the petition.