9911796707
TMI Blog1986 (8) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... 1976. This was subsequently revised on February 24, 1978, and as per the revised return, the total income was shown at Rs. 3,45,842. In this revised return the assessee claimed Rs. 19,92,263 for contingency provisions and also revised the depreciation chart in relation to which another reference made under section 256(1) is pending in this court. The assessee claimed to deduct Rs. 19,92,263 being contingency provision, which was disallowed in the earlier years 1974-75 and 1975-76. The Inspecting Assistant Commissioner (Assessment) after examining the claim of the assessee, allowed deduction to the extent of Rs. 5,97,867, vide its assessment order dated March 22, 1979, but disallowed the balance amount claimed of Rs. 13,94,396 on the ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e has been no departure made by the assessee, there was no reason to make a total departure by holding that some of the provisions of the contingency made by the assessee did not qualify for deduction at all. The case of the Revenue was that the assessee company itself has been changing its mode of computation in the matter of allowability of contingency from year to year. The Revenue further contended that up to the assessment year 1976-77, the total provision for contingency allowed was Rs. 1,19,564 in both accounts (i.e., Rs. 41,84,285 in the trading account and Rs. 78,10,279 in the contract account) against the allowable sum of Rs. 78,10,279 only for in the trading account the supplies made by the assessee shown as sales tax and even sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and 1975-76. " The Income-tax Appellate Tribunal, however, rejected the reference application stating that since in their order in R.A. No. 167(JP) of 1981, they had held this to be a question of fact, for the same reasons, the question is held to be not a question of law arising out of the order of the Income-tax Appellate Tribunal. Shri R. N. Surolia, learned counsel for the petitioner, contended that the assessee-company itself has been changing its method of computing contingency allowable from year to year. There was, therefore, no foundation for the order of the Income-tax Appellate Tribunal to hold that the accounting method remained the same as during the previous years. He has further contended that the contingency amount in b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tinction between an actual liability in praesenti and a liability de futuro which, for the time being, is only contingent. The former is deductible but not the latter. The matter of A. P. S. Cold Storage and Ice Factory v. CIT [1979] 119 ITR 709 (All) was decided by the Allahabad High Court. The facts of the case were that the assessee firm debited Rs. 30,000 as loss in its profit and loss account on account of an award given by the arbitrator as damages against the assessee. The assessee, therefore, debited a sum of Rs. 30,000 in its profit and loss account. It was held that as the award given by the arbitrator had not been made a rule of the court and as no decree had been passed against the assessee in respect of the sum awarded, it was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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