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TMI Blog2017 (8) TMI 369X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee’s own case held that making of a provision to meet a contingent liability need not be in order to meet such liability entirely in the year of its creation. The provision having been made on the basis of an actuarial report, which is not shown by the Revenue to be unacceptable on the ground that it is not based on known accounting of financial principles, the mere fact that the actual pay out in a particular AY may be far less than the provision cannot provide a justification to deny the deduction. The Court concurs with the view of the CIT(A) and ITAT that the provisions does not attract Section 43B of the Act. The concurrent finding of the CIT(A) and the ITAT on the above issue does not give rise to any substantial question of law. Interest accrued on advance given to M/s. Karsan - Held that:- We find that the issue in dispute is squarely covered by the decision of Hon’ble Jurisdictional High Court in the assessee’s own case as held there is no dispute that the ICA has awarded interest to the assessee @5% p.a. on the advance made to M/s. Karsan. It is also not disputed that the assessee could not make recovery against the advance (principal amount) of ₹ 130.6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e fact that sec. 145 of the IT Act, permits use of one type of accounting system in a particular year and mixed accounting system is not at all allowed. 2. On the facts and circumstances of the case, the Ld. CIT(A) erred in law and in facts of the case by not considering the fact that as per provisions of sec- 145 of the Act, which is mandatory for every assessee. 3. On the facts and circumstances of the case, the Ld. CIT(A) erred in law and in facts of the case by ignoring the provisions of AS- 15 where in the provisions are laid that only ascertained amount is allowable. 4. On the facts and circumstances of the case, the Ld. CIT(A) erred in law and in facts of the case by ^ - passing the order on the basis of decision in the case of the assessee in AY 2009-10 and ignoring the fact that an appeal is pending before the Hon'ble ITAT on the issue of accrued interest and decision is still awaited. 5. On the facts and circumstances of the case, the Ld. CIT(A) has erred in law and on facts by not considering the demurrage wharfage expenses as penalty. 6. On the facts and circumstances of the case, the Ld. CIT(A)has erred in law and on facts in not a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT(A) who partly allowed the appeal and confirmed the addition of ₹ 4,20,00,000/- on account of slow moving, non-moving and obsolete stores written off during the year and ₹ 14,02,00,000/- on account of Pension Scheme. Aggrieved, the assessee as well as the Revenue is before us. ITA No. 5122/Del/2014 4. First, we take up the appeal of the assessee. Grounds no. 1 4 are general in nature, not need to adjudicate upon. 5. In ground no. 2(i) and (ii), the assessee has challenged the addition of ₹ 4,20,00,000/- made on account of slow moving, nonmoving and obsolete stores written off. 5.1 At the time of hearing, learned counsel for the assessee submitted that the issue in dispute is squarely covered by the judgment of Hon ble Jurisdictional High Court in assesee s own case for assessment years 2006-07, 2007-08, 2008-09 and 2009-10 in ITA Nos. 783,785,815 and 816 of 2016 dated 08.02.2017. 5.2 On the other hand, the Sr. Departmental Representative relied on the order of Assessing Officer and contented that the assessee has not given any satisfactory reasons for changing the method of accounting, therefore, the addition made by the Assessing Officer i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be in order to meet such liability entirely in the year of its creation. The provision having been made on the basis of an actuarial report, which is not shown by the Revenue to be unacceptable on the ground that it is not based on known accounting of financial principles, the mere fact that the actual pay out in a particular AY may be far less than the provision cannot provide a justification to deny the deduction. The Court concurs with the view of the CIT(A) and ITAT that the provisions does not attract Section 43B of the Act. The concurrent finding of the CIT(A) and the ITAT on the above issue does not give rise to any substantial question of law. 7.4 Respectfully following the above decision of the Hon ble High Court, we uphold the addition of ₹ 14,02,00,000/- made the Assessing Officer and confirmed by the CIT(A). Accordingly, the grounds of appeal is dismissed. 8. In the result, the appeal of the assessee is partly allowed. ITA No. 5201/Del/2014 9. Now, we take up the appeal of the Revenue. In the grounds no. 1 to 4 are regarding the interest accrued on advance given to M/s. Karsan. 9.1 Learned Sr. DR relied on the order the Assessing Officer. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... annot be subjected to tax. Merely because the saie amount has been awarded by way of an order, does not mean that the assessee has received such income. The assessee followed mercantile system of accounting where there cannot be a situation of hypothetical income being taxed. 13. Indeed, it is seen that no part of the advance given by the Assessee to M/s. Karsan has been able to be recovered by it. As pointed out by learned counsel for the Assessee, there was a case registered with the Central Bureau of Investigation (CBI) in that regard and any prospect of the money being recovered has all but vanished. Since no part of the principal amount could actually be recovered by the Assessee, there was no real income' and the question of adding any notional accrued interest to its income on such amount does not arise. In the entire facts and circumstances of the case, the Court agrees with the concurrent findings of the CIT (A) and ITAT. No substantial question of law arises as regard this issue as well. 9.4 Respectfully following the above decision of Hon ble High Court, we uphold the order of the CIT(A) regarding the issue in dispute. Accordingly, grounds no. 1 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e s own case for assessment year 2006-07, 2007-08, 2008-09 and 2009-10 (supra). 10.3 We have heard the rival submission of the parties and perused the relevant material on record. We find that this issue is also squarely covered by the decisions of Hon ble Jurisdictional High Court (supra), wherein the Hon ble Court held as under: 6. The other question raised by the Revenue concerns the provision made for superannuation/post-retirement benefits of the employees of the Assessee. The Assessee made the provision n the basis of an actuarial report. Its consistent stand was accepted by the Commissioner of Income Tax (Appeals) [CIT(A)] who came to the conclusion that it was not an item of deduction covered under Section 43B of the Act. The ITAT in the impugned order followed the decision of the Supreme Court in Bharat Earth Movers v CIT, [2000] 245 1TR 428 (SC) and the decision of this Court in CIT vs. Bharat Heavy Electrical Ltd. [2013] 352 ITR 08 (Del) and upheld the order of the CIT (A). 7. The Court's attention is drawn by learned counsel for the Assessee to the decision in CIT v Ranbaxy Laboratories Ltd. (2011) 334 ITR 341 (Del). The ratio of the above decisi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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