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TMI Blog2025 (1) TMI 1011X X X X Extracts X X X X X X X X Extracts X X X X ..... tailed working of the estimated liability worked out by the appellant company for the year under consideration is without making any contractual payment to KPT or GMB and as such liability was not agreed by the KPT or GMB and the proposal made by the appellant was rejected. No substantial question of law. X X X X Extracts X X X X X X X X Extracts X X X X ..... hich the depreciation was claimed includes sum of Rs.10 crores each shown payable Kandla Port Trust (KPT) and Gujarat Maritime Board (GMB). The Assessing Officer, after making an inquiry with KPT and GMB, held that the liability provided in the books was of mere contingent liability, which cannot be considered as installation cost of the pipeline and therefore, the depreciation of Rs.5 crores in respect of Rs.20 crores was disallowed. >4. Being aggrieved, the appellant company preferred an appeal before the CIT (A), Jamnagar who confirmed the order of the Assessing Officer. The appellant, therefore, preferred an appeal being ITA No. 213/RJT/06 before the tribunal. >5. The tribunal, after taking into consideration the terms of the Memo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntract. There is a difference between an agreement which is based solely on concern parties and a law which derives its sanction from the will of the sovereign. A contract is essentially a compact between two or more parties, a law is not an agreement between parties but is a binding rule of conduct deriving its sanction from the sovereign authority. The contingent lability is condition of contract. In this performance become due only upon submission of some evidence, certain or uncertain mere postponing of time of performance or facts of performance being made depend upon conditions which must Happened upon a time or other will not make a contract conditional. If contingent, it is essential that contract must be distinguished from future. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isen in accounting year, the deduction is allowable although the liability may have to be quantified and discharged at a future date. What should be served is incurring of liability. It should also being established with reasonable certainty, though the actual quantification must be possible. We find that Hon'ble Gujarat High Court in the case of Amrish and Co. (supra), wherein it has been held that the amount is debited by the assessee which is payable to another firm for the use of their office and staff and other facilities was deductible since the assessee was following mercantile system. Wherein the Hon'ble Gujarat High Court in paragraph 11 of judgment has held that applying the aforesaid test, it is apparent on the facts of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oposal. When the assesses is following the mercantile system, if it is one time proposal no deduction can be allowed for the same money. Therefore, we are of the view that the CIT(A) is justified in his action. Our interference is not required. Both the grounds raised in this appeal are dismissed." >6. From the above observations of the tribunal, it is clear that the tribunal arrived at the finding of the fact after taking into consideration the terms of the Memorandum of Understanding (MOU) between the KPT and GMB and came to conclusion that the detailed working of the estimated liability worked out by the appellant company for the year under consideration is without making any contractual payment to KPT or GMB and as such liability wa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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