2011 (5) TMI 816

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....ngent liability and the real character of payment was that the advance or deposit and not of an expenditure under the mercantile system of accounting followed by the assessee?"   2. For the assessment year 2005-2006, the assessee had claimed deduction of Rs.8,11,99,503/- being amount of interest payable to ONGC. The Assessing Officer, during the course of assessment, disallowed the claim of the assessee believing that the liability had not accrued in the assessment year in question. The issue was carried in appeal by the assessee in appeals. The CIT (Appeals) disallowed the appeal. The issue was carried before the Tribunal by the assessee. Its appeal was allowed. Thereupon, the Revenue has approached this Court in the present appeal....

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....micably settled or finally adjudicated, where the liability in question is not a statutory liability. It has been further held as under:-   "Thus, the settled position in law is that in the case of an assessee following the mercantile system of accounting a liability is said to be properly incurred when the dispute between the parties is amicably settled or finally adjudicated, where the liability in question is not a statutory liability. In the case of the appellant it is apparent that the liability is pending adjudication by way of appeal in the Supreme Court and till the point of time the same is finally adjudicated, the liability in question would remain a contingent liability. It is pertinent to note that despite the earlier vi....