Interest payment claimed as deduction despite being called a 'provision'; treated as paid liability, disallowance overturned for assessee. Whether an interest provision could be disallowed as an unascertained liability was determined by applying SC precedent holding that the Act permits ...
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Provisions expressly mentioned in the judgment/order text.
Interest payment claimed as deduction despite being called a "provision"; treated as paid liability, disallowance overturned for assessee.
Whether an interest provision could be disallowed as an unascertained liability was determined by applying SC precedent holding that the Act permits deduction in the manner claimed and there is no estoppel against the statute. Since the expenditure was actually paid, the assessee was legally entitled to claim deduction of the entire amount in the year of payment, and it could not be disallowed merely because it was styled as a provision. The disallowance was set aside and relief was granted to the assessee.
The Supreme Court of India dismissed the appeal, stating that the matter is covered against the Revenue by a previous judgment in Taparia Tools Limited v. Joint CIT [2015] 7 SCC 540 : [2015] 372 ITR 605 (SC). The judges were A. K. Sikri and Rohinton Fali Nariman, JJ.
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