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TMI Blog2013 (11) TMI 1274X X X X Extracts X X X X X X X X Extracts X X X X ..... the year. (iii) The assessee could not explain why the entry was made on 31.03.2002 in the books of the accounts instead of on 21.12.2001if the settlement proposal indeed ended the dispute. (iv) The assessee could not furnish the confirmation of Larsen and Toubro Ltd. that the dispute had ended. 2. The Ld CIT (A) has erred on facts and in law by deleting the disallowance of Rs. 31,42,500/-without deciding on merits the contentions of the AO and by ignoring that: (i) The assessee could not furnish satisfactory evidence to prove that the liability had actually crystallized during the year. (ii) The assessee could not furnish evidence to show that relevant bill was raised and accepted during the year. (iii) The assessee could not explain why the entry was made on 31.03.2002 in the books of the accounts if the letter/fax dated 19.06.200, 24.09.2001 and 01.09.2001 are held by as evidence of crystallization of the liability" 3. Brief facts giving rise to this appeal are that the assessee filed a return declaring loss of Rs.65,63,600 under normal provisions of the Act and declaring nil income u/s 115JB of the I.T. Act. The Assessing Officer passed an order dated 22.03.2005 u/s 143( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... within their billing schedule to the assessee as per provisions of the contract. Since, the assessee's contract with Bhilai Steel Plant (BSP) was on Turn Key Basis, L & T supplied the equipments in accordance with the drawings approved by BSP. This resulted in net surplus variation in quantum of equipments. Thus TPI purchased the additional equipments from L & T (the additional quantity of equipments over their billing schedule). Thereafter the quantum of equipments and rate was reconciled between TPI and L T and on mutual settlement the statement was signed on 21.12.2001 and accordingly expenditure amounting to Rs. 37.35 lakhs was debited to P & L A/c in the accounting year 2001-02. From the evidences submitted by the assessee it has been found that there was a note sheet dated 21.12.2001 in which it has been specifically written that this reconciliation in the note sheet is a proposal which may be forwarded to head office for their approval before allowing the credit to L & T Ltd. In the note sheet it has been written that the proposal is submitted for onward submission to head office for their scrutiny and approval. This proposal can not be said to have ended the dispute regardi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the accounting year 2001-02 and there was actual supply of equipment amounting to Rs. 37,35,253. Therefore, the assessee company rightly claimed the expenditure in the year under consideration. These facts have not been disputed by the DR that the assessee company made above payment during the year under consideration for the purchase of additional equipment from L&T as per drawings approved by BSP. In view of above, this finding of the Assessing Officer is not sustainable that the liability was not actually crystallized during the year under consideration. Per contra, the Commissioner of Income Tax(A) rightly observed the mode of transaction recorded by the assessee company in its books of accounts. Accordingly, we are unable to see any perversity or infirmity in the impugned order in this regard and we uphold the same. Hence, ground no. 1 of the revenue is dismissed. Ground no. 2 9. Ld. DR submitted that the Assessing Officer rightly held that the assessee could not furnish satisfactory evidence to prove that the liability had actually crystallized during the year because the assessee could not furnish evidence to show that the relevant bills were raised and accepted during the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e letter dated 24.08.2001 the assessee has further reminded to BSP about their decision on the belt changing device and acceptance of woven wire decks. Since, no communication could be made till then by the BSP. Third letter a fax message by BSP dated 01.09.2001 in which it has been communicated that the assessee should supply belt changing device of stationary type as per provision of the contract. In the matter of PU Decks for vibrating screen it has been stated that the assessee should supply PU Decks as per the contract. From these letters it could not be ascertained as to whether the liability has actually crystallized in the year under consideration and the bill was raised and accepted by the assessee. It was also asked from the assessee as to why the entry has been entered in the books of accounts in the last date of financial year but no cogent evidence of the same could be furnished. Therefore, in absence of confirmation of BSP and in absence of any other cogent proofs clearly depicting the crystallization of liability in this year only, the claim of the assessee is hereby disallowed." 12. On appeal by the assessee, the Commissioner of Income Tax(A) deleted the above addi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, ground no. 2 is dismissed. CROSS OBJECTION NO. 407/DEL/2010 14. The grounds raised in C.O. of the assessee read as under: - "1. That on the facts and in the circumstances of the case, the learned Commissioner of Income Tax (Appeals) - XIX, New Delhi erred in confirming the action of Deputy commissioner of Income Tax Circle - 16(1), New Delhi in disallowing the appellant's claim in respect of following deductions: i) Rs. 9,85,000/-- claimed as Recovery of Cost of MST Compound by BSP. ii) Rs. 14,01,372/- claimed against Erection of Building Structure and Technological by M/s. Hindustan Steelworks Construction Ltd. iii) Rs. 1,79,000/-claimed against Final Painting by M/s Andrew Yule & Co. Ltd." 15. We have heard rival submissions of both the parties on the cross objections and observe that the Assessing Officer made certain additions related to recovery of cost of MST compound by BSP, claim of the assessee against the erection of building structure and technological structure and claim of the assessee against final painting by M/s Andrew Yule & Co. Ltd.. The above three additions were confirmed by the Commissioner of Income Tax(A) with the following observations:- "12.3 Rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of account for the Financial Year 2001-02 on the basis of the well known matching principle of Accountancy. The Assessing Officer stated that AYCL issued the bills on 12.07.2002 after settlement. He further stated that liability was not crystallized before 12.07.2002. The conclusion of the Assessing Officer is on correct footing. The action of the Assessing Officer is upheld. Confirmed: Rs.1,79,000/-" 16. Ld. counsel for the assessee submitted that claim of the assessee was justified because it was related to the year under consideration and the Assessing Officer was not justified in disallowing the same. The counsel for the assessee further submitted that the Commissioner of Income Tax(A) confirmed the above addition on erroneous grounds. Therefore, the AR requested that the findings of the authorities below be set aside by deleting the additions made by the Assessing Officer. 17. Ld. DR submitted that the assessee has not filed any separate appeal in this regard and he has filed Cross objection with an intention to resist the appeal of the revenue. The DR further submitted that the assessee is not serious about cross objections because the assessee has not furnished any sust ..... X X X X Extracts X X X X X X X X Extracts X X X X
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