2018 (12) TMI 1597

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.... 03.9.2018 for the assessment year 2012-13. 2. The assessee has filed this appeal raising the following substantial questions of law : "i. Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in holding that the provision created for payment of compensation to Garbandal Constructions was an unascertained liability not allowable as business expenditure ? ii. Whether the liability of the appellant to pay compensation has become ascertained immediately on failure of the assessee to comply with the terms and conditions of contract and only quantification of such liability was done later, which do not make the provision for payment of compensation as unascertainable f....

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.... 1,33,41,882/-, which, according to the assessee, was a provision made for contract loss. The assessee created a sum of Rs. 1,35,05,446/- as provision for contract loss. The Assessing Officer queried the assessee as to the basis of the same. By letter dated 13.3.2015, the assessee submitted that the provision was created on account of arbitration proceedings filed against the assessee company before this Court and that the said sum was written back in the subsequent years. Therefore, the assessee contended that the said provision is allowable. 7. The Assessing Officer opined that the said provision is only contingent in nature and to support such a conclusion, he recorded that the fact that in the subsequent years, the said provision was....

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....ries and came to the conclusion that the there were three versions placed by the assessee. The Tribunal also referred to the application filed by the contractor before this Court initiating arbitration proceedings and there is also a reference to the counter claim made by the assessee. 10. Thus, the question to be decided is as to whether the provision made was a real estimate or contingent or whether it could have been made in the assessment year 2012-13. 11. It is contended by the learned Standing Counsel for the Revenue before us that an arbitration award was passed in January 2016 and therefore, the year, in which, the provision could be made, is very crucial. 12. On going through the order passed by the CIT(A), we find that th....