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TMI Blog2019 (1) TMI 1527X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee for meeting the liability incurred by it before the date of closure of accounts is an allowable deduction out of gross receipts of the accounting year during which the provision for meeting such expenditure was made and such a liability is not a contingent liability. Rule of consistency demand that unless and until something illegal is shown, AO has to follow the course of action taken for the earlier years. We found that the liability said to have been discharged in this matter by way of provision was in respect of the expenses already incurred during the financial year 2011-12 and payments made subsequent to the closure of the books of accounts but before the approval of the same. While respectfully following the decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peal, learned CIT(A) while confirming certain additions, however, deleted the addition made by the learned AO to the tune of ₹ 3,83,57,753/- on the ground that this provision is unascertained expenditure but it was the liability that was existing at the end of the financial year but the payments made subsequent to the end of the financial year but before the finalization of the accounts. The revenue is, therefore, preferred this appeal. 4. It is the argument of learned DR that this particular amount is an unascertained liability; there is a deferment of payment of tax which involves the element of interest and further the contention of the assessee by placing reliance on the Accounting Standard 4 is untenable because as per Income- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n his order. Lastly, learned AR submitted that this is a revenue neutral transaction because if such an expense is not allowed in the current assessment year, it has to be allowed in the next year inasmuch as there is no doubt expressed by the learned AO as the genuineness or incurring of such expenditure. 7. We have gone through the record in the light of the submissions on either side. There is no denial of the fact that, as a matter of fact, learned CIT(A) after referring to the bills and vouchers reached a conclusion that the assessee has been following the mercantile system of accounting, the expenses were not relating to the months of January, February and March, 2012 for the financial Year 2011-12 and in view of the system of acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made and such a liability is not a contingent liability. We, are, therefore, convinced that the case on hand is fully covered by the ratio laid down in the case of Bharat Earth Movers (supra) by the Hon ble Apex count and by no stretch of imagination, could it be said that the matter involves contingent and conditional liability but on the other hand, it is the expenditure that was already incurred during the financial year but payment takes place after the closure of accounts but before approval of the same. 9. Learned CIT(A) also, on further verification of the assessment order and the balance sheet for the Asstt. Year 2011-12, found that for such year the balance sheet revealed that the postage payable to the extent of ₹ 13,17,4 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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