2015 (8) TMI 318

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....isers and other related industrial products. It filed its return of income on 29.9.2009 declaring income of Rs. 253,15,13,265/-. It was revised on 30.3.2011 declaring the very same income. The AO passed an order u/s 143(3) of the Act on 14.11.2011 determining the total income at Rs. 350,78,38,270 inter alia making the following additions/disallowances. i. Business income Rs.253,15,13,265 ii. undisclosed interest income Rs. 6,48,20,000 iii. Disallowance of demurrage charges Rs. 2,36,00,000 iv. Diminution of slow moving spares Rs. 6,98,38,000 v. Provision of post retirement benefits Rs. 7,79,00,000 vi. Provision of wage arrears Rs. 74,01,67,000 total income Rs. 350,78,38,265 total income rounded of....

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....f disallowance of provision for wage arrears ignoring the fact that as per assessee company, the calculation was made on estimated basis. Thus, these are unascertained liabilities and cannot be allowed as per provision of section 37{1) of the Act; 5. The appellant craves to be allowed to add any fresh grounds of appeal and/or delete or amend any of the grounds of appeal. 4. We have heard Mr. Gunjan Prasad, Ld.CIT(A), D.R. on behalf of the Revenue and Mr.Ved Jain, the Ld.Counsel for the assessee. 5. On a careful consideration of the facts and circumstances of the case, on perusal of material on record, orders of the authorities below, case laws cited, we hold as follows. 6. The first ground that arises for our consideration is th....

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..... Respectfully following the same, we dismiss this ground of Revenue. 7. Ground no.2 is against the deletion of addition of Rs. 2,36,00,000 being demurrage & wharfage charges. These charges are paid to the railways towards delay in loading and unloading operations beyond the time frame fixed by the Indian railways. The AO was of the view that the amount paid as demurrage and wharfage to the railways is a fine or penalty and hence disallowed the expenditure. The Ld.CIT(A) has dealt with the issue at page 44 para 5. The payment in question is not the penalty or fine for violation of any statute. It is compensatory in nature. The issue stands covered by the following decisions. i. Nanhoomal Jyoti Prasad vs. CIT (1980) 123 ITR 269 (All.) ....

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....used the records. We find that Hon'ble Apex Court in the case of Bharat Earth Movers vs CIT has held that 'if a business liability has definitely arisen in the accounting year, the deduction should be allowed although the liability may have to be quantified and discharged at a future date. What should be certain is the incurring of the liability. It should also be capable of being estimated with reasonable certainty though the actual quantification may not be possible. If these requirements are satisfied, the liability is not a contingent one. The liability is in presenti though it will be discharged at a future date. It does not make any difference if the future date on which the liability shall have to be discharged is not certain. 8. ....