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TMI Blog2022 (11) TMI 228X X X X Extracts X X X X X X X X Extracts X X X X ..... rovision made is an unascertained liability on the basis that the liability to pay would arise on a future date.. The CIT(A) relied on the decision of FFE Minerals [ 2018 (9) TMI 357 - MADRAS HIGH COURT] while upholding the disallowance. In our view this case is distinguishable from assessee s case since the fact of the said case is different to the extent that only negotiations and discussion took place and the final amount of liquidated damages was computed much later. In assessee s case, however, the provision is made based on the terms agreed with the customer and it relates to the period relevant for the year under consideration. In view of the above discussion we hold that the provision made for liquidated damages is an ascertained liability and should be allowed as a deduction. The disallowance made by the AO in this regard is deleted. Appeal filed by the assessee is allowed. - ITA No. 534/Bang/2022 - - - Dated:- 26-9-2022 - Shri George George K., Judicial Member And Ms. Padmavathy S., Accountant Member Assessee by: Shri Deepak Chopra, CA Revenue by: Smt. Priyadarshini Baseganni, Addl. CIT ORDER Per: Padmavathy, A.M. This appeal is again ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9;s provisions in the income computation of subsequent year. [Tax effect of above ground : Rs 33,84,980/-] 4. In view of the above and on other grounds to be adduced at the time of hearing, it is requested that impugned assessment order be quashed or at least disallowance of Rs. 49,20,000/- be deleted. [Tax effect of above ground : Rs 33,84,980/-] 3. The assessee is in the business of automated lubrication systems, manual lubrication equipment and industrial pumping systems. The assessee returned total income of Rs.37,18,54,400/- for AY 2012-13 vide revised return of income. The case was selected for scrutiny and an assessment order was passed under Section 143(3) r.w.s. 144C of the Income Tax Act, 1961 (the Act) on 16.02.2015 wherein the assessee company s income was assessed at Rs.37,74,93,367/-. Subsequently notice under Section 263 of the Act dated 26.12.2017 was issued by the PCIT stating that the order under Section 143(3) r.w.s. 144C(13) of the Act dated 16.02.2016 is erroneous and prejudicial to the interest of Revenue because the assessee has been allowed deduction for provision for liquidated damages on Rs.49,20,000/- which was an unascertained lia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erial on record. The assessee during the year under consideration has made a provision for liquidated damages for an amount of Rs. 49,20,000/-. The AO during the revision proceedings has disallowed the said amount on the basis that the calculation of liquidated damages is based on percentage agreed upon the time of purchase order and at the time of making the provision the assessee would not be aware of the date of delivery which a future date. Against the appeal filed by the assessee before the CIT(A) the disallowance was upheld on the basis that the liability would arise only on actual supply and therefore the provision made for the year under consideration is an unascertained liability. The CIT(A) in this regard relied on the decision of the Hon'ble Madras High Court in the case of FFE Minerals India (P.) Ltd. vs. JCIT (2018) 98 taxmann.com 170 (Madras). We perused the working submitted by the learned A.R. with regard to calculation of liquidated damages which is extracts as below: - SI. So. Customer Name Sales Order No. ED CLAUSE IN PO (Y/N) Delv as per PO Weeks Delay as on 31- Ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0/11/2011 18 0.50% 5.00% 10.00 2,00,000 10,000 10 ITC LIMITED 1004414 Y 29/02/2012 5 1.00% 10.00% 10.00 53,93,630 2,69,682 11 THYSSENKRUPP INDUSTRIES INDIA PVI 1004003 Y 15/11/2011 20 0.50% 5.00% 10.00 4,52,000 22,600 12 THYSSENKRUPP INDUSTRIES INDIA PV.1. 1004007 Y 30/09/201 I 27 0.50% 5.00% 10.00 46,50,000 2,32,500 13 ABHIJEET PROJECTS LTD 1003845 Y 25/12/2011 14 1.00% 10.00% 10.00 22,00,000 2,20,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5/09/2011 29 0.50% 5.00% 10.00 13,67.000 68,350 24 PAUL WORTH INDIA PVI I I'D. 2008647 Y 04/01/2012 13 0.50% 5.00% 10.00 10,99.759 54,988 25 MUKAND LTD. 1002590 Y 30/05/2010 44 0.50% 5.00% 10.00 12,00,000 60,000 26 MUKAND LTD. 1002849 Y 30/05/2010 44 0.50% 5.00% 10.00 12,40,000 62,000 27 MAITHAN !SPAT LIMITED 1001798 Y 15/01/2009 12 1.00% 5.00% 5 00 19,93,791 99,690 28 MAIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1004314 Y 31/10/2011 22 0.50% 5.00% 10.00 12,80,000 64,000 38 LARSEN TOUBRO LTD. 1004283 Y 20/09/2011 28 0.50% 5.00% 10.00 3.00,700 15,035 39 LARSEN TOUBRO LTD. 1004671 Y 29/02/2012 5 1.00% 10.00% 10.00 2.00,000 10,000 40 LARSEN TOUBRO LTD. 1004673 Y 29/02/2012_ 5 1.00% 10.00% 10.00 7,19,264 35,963 41 METAL ENGINEERING TREATMENT 1003854 Y 31/03/2011 53 0.50% 5.00% 10.00 8,00,00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... McNALLY SAYAJI ENGINEERING LTD. 1004537 Y 30/03/2012 1 0.50% 10.00% 20.00 1,85,640 928 52 McNALLY SAYAJI ENGINEERING LTD. 1004797 Y 30/03/2012 I 0.50% 10.00% 20.00 2.55,000 1.275 53 JSL STAINLESS LTD. 1004689 Y 24/03/2012 1 0.50% 5.00% 10.00 4.21,800 2.109 54 SIEMENS VAI METALS TECHNOLOGIES (P) 1004666 Y 30/03/2012, 1 0.50% 5.00% 10.00 3,60,000 1.800 55 ESSAR STEEL LIMITED 2008856 Y 28/02/2012 5 0.50% 5.00% ..... X X X X Extracts X X X X X X X X Extracts X X X X
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