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TMI Blog2015 (10) TMI 245X X X X Extracts X X X X X X X X Extracts X X X X ..... to Rs. 1,77,87,000/- to directors and staff, without considering the fact that there was no ascertained liability on the account of performance related pay, since neither approved by Board of Directors, nor reliably estimated as on 31-03-2009. 2. On the facts and circumstances of the case and in law, the ld. CIT(A) erred in ignoring that as no reliable estimates are made , it amounts to contingent liability, which is not allowable under I.T. Act. 3. The appellant prays that the order of Ld. CIT(A) on the above grounds be set aside and that of the Assessing Officer be restored". 2. The only ground agitated by the revenue in this appeal is with regard to CIT(A)'s action in deleting the addition made on account of performance related pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The amount has been offered as income for taxation by the concern Director. Form No. 16 (salary certificate of the Director), a copy of Income Tax return of the Director, extracts of bank statements reflecting payment/receipt of Rs. 17,94,000/- to the Director, certificates from appellant for detailed breakup of salary paid to the director was submitted to show that the payment to Directors was a bonafide payment. Similarly payment to staff has also been accounted for by making a provision in the P&L Account and then paying the amount after receiving approval for payment. It was stated that the provision had been made for the said payment as bills had not been raised but liability was incurred. It was stated by the appellant that this is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or Shri D. R. Dogra would need to be accepted. The above mentioned documents clearly record the payment made to the Director through banking channels, tax deducted at source on the above payment and the amount being included in the Income Tax return of the Director for Assessment Year 2009 - 10. It is also seen that the minutes of the Board meeting held on June 15, 2009 record the fact that the Director was eligible for payment of commission for the period July 08 to March 09 and variable pay from April 08 to June 08. The said extracts of the minutes of the meeting held have been signed by the Company Secretary and record the amount that was payable to the said Director for Financial Year 08-09 in terms of the scheme approved by the Board. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... leting the addition has not taken into consideration the fact that there was no ascertained liability on the account of performance related pay, since neither approved by the Board of Directors nor reliably estimated as on 31-3-2009. Therefore, the AO was right to disallow the amount in question. 6. Per Contra, ld. AR supporting the order of the CIT(A) submitted that albeit the provisions are made on estimated basis, but it has also been emphasized that they are crystallized liabilities and, therefore, the same has rightly been allowed by the CIT(A). Ld. AR placed reliance on the order of the Tribunal in its own case passed in ITA No.6355/Mum/2003(AY 2000-01), order dated 13-11-2006, wherein exactly similar disallowance was deleted by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its order dated 13-11-2006, wherein the Tribunal deleted the addition so made on the provisions for expenses. The relevant observations of the Tribunal are as under :- "9. We have duly considered the rival contentions. On perusal of the ld. CIT(A)'s order we find that in principle ld. first appellate authority upheld the contention of assessee while deleting the disallowance of major provision of expenses which have been otherwise actually utilized. The ld. CIT(A) only upheld the disallowance of excess provision. It is to be seen that provision was made looking to the nature and quantity of expenses on a bona fide estimate. Had the assessee was having exact details of expenses then it could have quantified the expenses. It has made the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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