2015 (12) TMI 289

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....ound challenges the lower appellate order deleting disallowance/addition of assessee's claim in respect of its liquidated damages; made by the Assessing Officer in assessment order dated 10-10-2011 after holding that there was no evidence furnished establishing that the sum in question stood debited being only a provision for expected further expenditure. 3. The assessee filed appeal. The CIT(A) has accepted its claim as follows:- "4.3. The learned A.R. has submitted the submission in this regard is as under:- The assessee has furnished the complete details of liquidated damages to its customers for late delivery of goods. Such damages are payable for breach of contractual terms in respect of delivery of goods. From the details submitte....

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....ractual terms in respect of delivery of goods. It is business expenditure allowable u/s 37(1) of the IT Act, 1961. In case of the assessee in past such expenditure has been allowed by Hon'ble ITAT, Ahmedabad in respect of Assessment year 1984-85, 1986-87, 1987-88, 1988-89, 1989-90, 1990-91. In assessee's own case in assessment year 1989-90 and 1990-91 the assessing officer had accepted the contention of the assessee and allowed the provision for bad debts representing liquidated damages. The learned A.R. relied upon the decision of Pune ITAT in case of Thermax Babcock & Wilcox Ltd reported in 7 DTR (Pune)(Trib) 162. In the said decision it is held that provision for liquidated damages, once an assessee is maintaining its accounts as....

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....vision for liquidated damages is allowable expenditure in this year and the A.O. is directed to delete the addition of Rs. 26,76,000/-. 5. Ground no 4 relates to addition of Rs. 26,76,000/- in computation of income, though the same was added in the return of income. 5.1. The appellant has submitted that as discussed above the appellant himself has added provision for liquidated damages in the statement of total income and had claimed deduction by way of letter. Therefore, though the A.O. has not accepted the claim of the appellant no separate addition is called for. 5.2. I have gone through the assessment order and the submission of the appellant. I found that the contention of the learned A.R. is correct and therefore, the A.O. is di....