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of <h1>Court confirms deletion of addition for damaged goods provision, upholds assessee's win.</h1> <h3>THE PR. COMMISSIONER OF INCOME-TAX-3, AHMEDABAD Versus RASNA PRIVATE LIMITED</h3> THE PR. COMMISSIONER OF INCOME-TAX-3, AHMEDABAD Versus RASNA PRIVATE LIMITED - TMI Issues:Challenge to judgment of the Income Tax Appellate Tribunal regarding the deletion of addition of provision for damaged goods.Analysis:The High Court addressed the issue of whether the Income Tax Appellate Tribunal was justified in upholding the deletion of the addition made by the Assessing Officer on account of disallowance of provision for damaged goods. The Court referred to a previous judgment involving the same assessee, where it was observed that the Tribunal had considered the issue based on the assessee's own case in previous years. The Court noted a change in the method of accounting employed during the years under review and considered relevant accounting standards. Citing the decision in Rotork Controls India (P.) Ltd, the Court emphasized that a provision is recognized when certain conditions are met, including having a present obligation as a result of a past event and a reliable estimate of the obligation amount. The Court concluded that the CIT(A) and the Tribunal were correct in disallowing the addition made by the Assessing Officer, and thus, upheld the Tribunal's decision in favor of the assessee.The Division Bench of the High Court analyzed the issues of disallowance of provision for current years and actual liability for earlier years. The Court affirmed that the Tribunal's decision was based on the assessee's own case in previous years, with identical facts. Considering a change in the accounting method and relevant accounting standards, the Court found that the case was covered by these standards. Referring to the decision in Rotork Controls India (P.) Ltd, the Court reiterated the conditions for recognizing a provision. Ultimately, the Court ruled in favor of the assessee, confirming the Tribunal's decision and dismissing the Tax Appeal filed by the Revenue. The judgment favored the assessee and upheld the deletion of the addition related to the provision for damaged goods, as decided by the Tribunal.
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