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TMI Blog2014 (8) TMI 766X X X X Extracts X X X X X X X X Extracts X X X X ..... r year, it does not become a liability payable of that year unless and until it is established that the liability was determined and crystallized in the year on the basis of maintaining accounts on the mercantile basis - incurring of expenditure for repairing was not established by the assessee for the year under appeal and so-called provisions made by it does not fall under the criteria as laid down by the courts for allowing provisions , the contentions raised by assessee rejected – Decided against Assessee. - ITA No. 5139/Mum/2010 - - - Dated:- 20-8-2014 - S. Sh. Vijay Pal Rao And Rajendra,JJ. For the Petitioner : Shri Y. P. Trivedi Ms. Usha Dalal For the Respondent : Shri Sumit Kumar ORDER Per Rajendra, AM Challenging the order dt. 06. 04. 2010 of the CIT(A)-5, Mumbai, assessee-company has raised following Grounds of Appeal: 1. The Commissioner of Income Tax (Appeals) (hereinafter referred to as CIT(A) erred in law and facts in upholding the disallowance of ₹ 14, 00, 000 on account of provision for repairs maintenance carried out by the Appellant to its office building during the assessment year and bills settled in the subsequent y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the aforesaid bills. He further held that the assessee had been consistently following the system of accounting for expenses based on receipt of the bills, that bill from SE revealed that the work of plastering/ painting/waterproofing etc. was a prolonged one culminating in the final bill raised in FY 2007-08, that the expression 'provision for expenses', used by the assessee itself betrayed the nature or this debit, that the liability had not accrued in the year under appeal, that amount of ₹ 14 lakhs debited to the P L account and included under the head 'repairs maintenance' had to disallowed. 2. 2. Aggrieved by the order of the AO, the assessee filed an appeal before the First Appellate Authority(FAA). Before him, it is stated that the AO erred in disallowing a sum of ₹ 14 lakh in respect of provision made for repairs and maintenance, that he ought to have appreciated that similar provision made earlier had been allowed by the AO, that the AO had erred in holding that the liability did not pertain to the year and did not appreciate that the final bill was received in the month of October 2007 and the liability had already accrued during the ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ced before any of the authority about the work done during the year, the bills did not given the period when the work was actually done, that the bills did not pertain to the year-except one. It was also stated that cases cited by the assessee were not applicable as the facts were different. 2. 4. We have heard the rival submission and perused the material before us. We find that the undisputed facts of the case under consideration are that the assessee had made a claim of ₹ 14 lakhs under the head provision for repairs and maintenance, that the bills for repairs were received by it in the succeeding year, that the AO had disallowed the expenditure. As per the established principles of taxation jurisprudence onus is always on the assessee to prove that expenditure was incurred wholly and exclusively for the purposes of business for a particular year. If the assessee furnishes documentary evidences about incurring of expenditure AO has to allow it, but if it fails to lead such evidences then expenditure cannot be allowed. Because it will be a case of spending of certain amount and every outgoing or spending of money cannot be termed an expenditure incurred for business purp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is clear that provision can be made an allowed in certain conditions. Deductions are not permissible for anticipated losses or contingent liabilities, even if they are inevitable. It is not the case of the assessee that it is in the business of repairing and maintenance and considering last many years experience it has to set apart some amount every year for unfinished projects. It is also not proved that provision was based on any historical trend . Merely because an expense is claimed to be relating to a transact - tion of a paticualr year, it does not become a liability payable of that year;unless and until it is establishded that the liability was determined and crystallised in the year in question on the basis of maintaining accounts on the mercantile basis. In these circumstances, we are of the opinion that argument taken by the assessee is of no help. Now, we would like to discuss the cases relied upon by the assessee. First among them is the matter of Bharat Earth Movers(supra). Facts of the case were that the assessee had two sets of employees, one set of employees was covered by the Employees State Insurance Scheme and was generally known as staff, the other set of e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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