9911796707
TMI Blog2008 (3) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of this Court or by a judgment of the Supreme Court. As such, those two issues were not pressed. With regard to the remaining three issues, we heard learned counsel for the parties and in our opinion no substantial question of law arises in respect of these three issues also. 3. The first issue is whether the Income Tax Appellate Tribunal (the Tribunal) was correct in law in permitting the Assessee to lead additional evidence in accordance with Rule 46A of the Income Tax Rules, 1962 (the Rules). 4. It appears that the Assessee had wanted to lead additional evidence before the Commissioner of Income Tax (Appeals) [CIT (A)] but the requ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g principle. Clearly, therefore, no substantial question of law arises for consideration. 8. The second issue relates to a provision of Rs.83,38,507/- for warranties which was allowed by the Tribunal. According to learned counsel for the Revenue, the amount did not represent an accrued liability and, therefore, the Tribunal was not justified in allowing the provision made. 9. In this regard, it is worth noting that the Assessee follows the mercantile system of accounting and it carries on the business of dealing in computers and computer peripherals. The sales of the Assessee run into a huge volume and are spread over a large geographical area. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate. What should be certain is the incurring of the liability. It should also be capable of being estimated with reasonable certainty though the actual quantification may not be possible if these requirements are satisfied the liability is not as contingent one. The liability is in presenti though it will be discharged at a future date. It does not make any difference if the future date on which the liability shall have to be discharged is not certain. 13. Reference was also made to Commissioner of Inland Revenue v. Mitsubishi Motors, New Zealand, [1996] 222 ITR 697 (PC). Relying upon these two decisions and the facts noted above as well as the fact that the Assessee follows the mercantile system of acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... presenti but it may be quantified and discharged at a future date and the assessee would be entitled to claim a deduction thereon. 17. The decision in Vinitec Corporation was followed by another Division Bench of this Court in Commissioner of Income Tax v. Sony India (P) Ltd., [2007] 160 Taxman 397. The matter now having been conclusively settled by this Court in at least two decisions, no substantial question of law arises for consideration. 18. The third issue relates to deduction in respect of provision made by the Assessee for doubtful debts, customs duty, warrantee, gratuity and loss due to foreign exchange rate fluctuations while computing the book profit for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h this proposition in view of Explanation (c) to Section 115-JB(2) of the Act. It has been held by this Court in Commissioner of Income Tax v. Eicher Ltd., [2006] 287 ITR 170 that Explanation (c) to Section 115-JA(2) of the Act makes it clear that the book profit means a net profit as shown in the profit and loss account as increased by an amount set aside for meeting liabilities other than ascertained liabilities. It cannot be said that a bad and doubtful debt is not an ascertained liability. That being so, Explanation (c) to Section 115-JB(2) of the Act ( which is similar to Explanation (c) to Section 115-JA(2) of the Act) would not come into play. 22. In Commissioner of Income Tax v. HCL Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he principle enunciated in Metal Box and held as follows:-In other words, the gratuity payable to an employee represents a part of the emoluments payable to him for rendering service during each year. The right to receive gratuity accrues to the employee as soon as he completes one year of service and, as a corollary, the liability to pay the gratuity to the employee arises to the assessee at the end of each year. The amount of the liability is also ascertainable and there is no question in the present case of the discounted present value of the liability being not ascertainable. It is no doubt true that the actual payment of the gratuity is deferred to a later date on the happening of a certain event, namely, death or voluntary retirement ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
