Liquidated damages provision was disallowed as it was based on ...

Liquidated damages disallowed. Warranty provision upheld. TPO's income enhancement void. AE services not stewardship. Re-notification due.

Case Laws Income Tax

July 30, 2024

Liquidated damages provision was disallowed as it was based on unascertained liability without probability of outflow of resources. ITAT deleted addition, holding provision arose from contractual obligation and estimation basis was reasonable based on past experience. Warranty provision at 2% of turnover based on past experience was appropriate, fulfilling accrual and matching concepts, unlike accounting expense in year incurred or on claim by customer. TPO's rectification enhancing income was void ab initio for lack of opportunity to assessee before enhancement u/s 154(3). ITAT's conclusion that services provided by AE were not stewardship services upheld. Questions 2.5 and 2.6 to be re-notified on 07.03.2024 for submissions.

View Source

← Previous Next →

Liquidated damages provision was disallowed as it was based on ...

Liquidated damages disallowed. Warranty provision upheld. TPO's income enhancement void. AE services not stewardship. Re-notification due.

Case Laws Income Tax

July 30, 2024

You may also like:

The Commissioner of Income Tax (CIT) invoked Section 263 to revise the Assessing Officer's (AO) order, disallowing the amount paid on termination of an agreement,...

Disallowance of assessee’s claim in respect of its liquidated damages - Revenue argument that these liquidated damages are only in the nature of a provision is...

Provision for anticipated losses - wherever exemption or deductions are called for, the same has been provided explicitly in the provision of the Income Tax Act. Even,...

The court dismissed the appeal against the arbitrator's decision not to levy liquidated damages due to the failure to plead and demonstrate legal injury. The court held...

Levy of service tax with interest and penalty - liquidated damages - While the above Orders have been passed by the Tribunal in 2022, subsequently, CBIC has issued...

Disallowance of liquidated damages claimed by assessee - “Liquidated damages” are compensation paid for breach of contract. We are therefore, unable to understand how...

Payment of liquidated damages - Capital or Revenue in nature - the claim of assessee on liquidated damages deducted under the agreed condition of the contract is...

Deductible expenses u/s 37 - provisions for warranty claims - The Tribunal upheld the practice of making provisions for warranty based on a reasonable estimation method...

Disallowance of provision of warranty - The provision made by the assessee was ascertained based on the actual expenses incurred on settlement of warranty schemes in...

The Appellate Tribunal held that liquidated damages/penal interest charged at 2% by the appellant cannot be construed as additional consideration but is a penal interest...

Provision for warranty - assessee derived advantage by deferring its income to the extent of excess warranty provision to subsequent years. Therefore, such excess...

Provision for warranty - provision of warranty was made every year in accordance with accounting standards 29 and the provision is worked out scientifically every year...

Levy of GST - Supply or not - liquidated damages recoverable by the applicant from Belectric India on account of delay in commissioning - time of supply - The contract...

Business expenditure u/s 37 - liquidated damage - breach of contract terms - Expenditure was not incurred for any purpose which is an offence or which is prohibited by...

Disallowance of payment of liquidated damages and interest on delayed payment of Value Added Tax (VAT) as deduction - any payment made for breach of contractual...

Quick Updates: