9911796707
TMI Blog2008 (9) TMI 357X X X X Extracts X X X X X X X X Extracts X X X X ..... sed two issues before this Court. One was with regard to the payment made to expatriates in the sum of Rs 4,03,31,726/-. According to the revenue the said payment could not be treated as an accrued liability in the year in question because the Reserve Bank of India's permission for such remittances had been received in the subsequent year. The case of the revenue is that since the approval for remittances had been received in the subsequent year, there could not have been an accrued liability in the current year. 3. The other issue sought to be raised by the revenue pertains to the provision made for bad/doubtful debts for the purposes of computing book profits under Section 115JA of the said Act. The Assessing Officer made an addition on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion under the head "expatriate cost" for remuneration to be reimbursed to EDS Global Services Inc., USA. The provision had been made on the basis of invoices raised by EDS Global Services Inc., USA on the assessee. During the course of the assessment proceedings, the Assessing Officer had noticed that the assessee had filed an application with the Reserve Bank of India for approval of the agreement and remittances to EDS Global Services Inc., USA. The requisite approval had been received after the expiry of the previous year relevant to the assessment year under consideration. The Assessing Officer disallowed the claim of the assessee on the premise that since the approval of the agreement had not been received during the year in question, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was distinguishable because in that case the approval of the Central Government was a pre-condition before which commission could not be paid to managing agents. Since the approval of the Central Government had not been received during the relevant year, the Supreme Court arrived at the conclusion that the liability had not accrued in that year. The Tribunal noted, and in our view correctly, that the assessee's liability to pay the remuneration of the managing agents arose only when the government conveyed its approval and not prior to that date. 8. In the present case, the approval of the Reserve Bank of India was not a pre-condition for entering into an agreement between the assessee and EDS Global Services Inc., USA. The permission of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re hiring of the services of EDS Global Services Inc., USA, meaning thereby that entering into the agreement between the assessee and EDS Global Services Inc., USA was itself not in question. In Nonsuch Tea Estate Ltd. [1975] 98 ITR 189, the Supreme Court noted its observations in an earlier case, namely, CIT v. A. Gajapathy Naidu [1964] 53 ITR 114 wherein it had observed that the mercantile system of accountancy brings into credit what is due immediately it becomes legally due and before it is actually received; and it brings into debit expenditure of the amount for which a "legal" liability has been incurred before it is actually disbursed. It is in the context of the expression "legal liability" that the Supreme Court in the case of Nons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Co. P. Ltd. [2003] 259 ITR 33. In Bhai Sunder Dass and Sons Co. P. Ltd. [2003] 259 ITR 33 also there was absolutely no restriction on the assessee entering into an agreement with any person resident outside India for rendering of services and the restriction was only limited to the remittances of money abroad without the permission of the Reserve Bank of India. We find that the case of Bhai Sunder Dass and Sons Co. P. Ltd. [2003] 259 ITR 33 is squarely applicable to the facts of the present case. The Tribunal has correctly applied the law on the basis of the facts determined by it.
11. Therefore, on both the issues proposed by the revenue, we find that no substantial question of law arises for our consideration. The appeal is dismissed. X X X X Extracts X X X X X X X X Extracts X X X X
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