TaxTMI 
TaxTMI 
2020 (10) TMI 1195
X X X X Extracts X X X X
X X X X Extracts X X X X
....rely ascertained liability as per the Order of Govt, of Odisha and therefore the liability is actually existing on the balance sheet date. (c) Hence, it is pure misinterpretation of facts to term such existing liability for the FY 2008-09 as contingent liability. (d) Further the case law of Molasses company Private Limited vs CIT (1959) 37ITR 66(SC) was overruled by Kolkata High Court in CIT vs Molasses Company Private Limited in 166 ITR 740 Cal and hence is not applicable in our case. (e) Hence, the addition made by the Ld.AO is bad in law and may please be deleted. 3. That the appellant craves leave to add or to amend the above grounds of appeal before or at the time of hearing of the appeal. 4. For these and among other grounds to be urged at the time of hearing, adequate relief as may be deemed fit be granted in the matter. 2. The assessee has taken four grounds in which he has challenged the addition amounting to Rs. 20.05 crores, which was disallowed by the AO on the direction of revisionary proceedings passed by the CIT u/s.263 of the Act. The AO has passed the order on the direction of ld. CIT in respect of claim of provisions....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the previous year 2008-09. In this view of the matter, I confirm the action of the AO to disallow the provision of Rs. 20.05 crores in the assessment. Hence, the disallowance of Rs. 20.05 crores is confirmed. 4. Further feeling aggrieved from the order of CIT(A), the assessee is in appeal before the Income Tax Appellate Tribunal. 5. Before us, ld. AR reiterated the submissions made before the lower authorities and stated that as per the Accounting Standard-4 issued by the Institute of Chartered Accountant of India (ICAI) that the events occurring after the date of the balance sheet date but before the closing of the books of accounts of the assessee. The books of accounts were closed by the assessee much after issuing notification by the Government of Odisha. Ld. AR referred to Accounting Standard-4, which reads as under:- "8. Events Occurring after the Balance Sheet Date 8.1 Events which occur between the balance sheet date and the date on which the financial statements are approved, may indicate the need for adjustments to assets and liabilities as at the balance sheet date or may require disclosure. 8.2 Adjustments to assets and liabilities are ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ich was claimed by the Assessee on account of ad hoc provision for pay revision, had not accrued during the relevant FY i.e. 2006-07 (AY 2007-08). Merely because Pay Revision Committee was constituted during the year, it cannot be said that liability towards pay revision had accrued during the year, when we consider the facts that the Pay Revision Committee had not completed its deliberations before the end of the FY 2006-07 and was yet to submit its report at the time when the FY 2006-07 came to an end; and furthermore, that the pay revision was finally implemented in pursuance of aforesaid Office Memorandum dated 26.11.2008 in No.2(70)/08-DPE(WC) of Ministry of Heavy Industries & Public Enterprises. During FY 2006-07 (AY 2007-08), there was neither any statutory liability nor any legally enforceable liability against the Assessee in respect of the Assessee's claim for Rs. 1,60,00,000 deduction for which was claimed by the Assessee on account of ad hoc provision for pay revision. In fact, there was no such liability at all. Even if there was a liability, it was purely a contingent liability which is not deductible for income tax purposes. 3.2 We have given anxious con....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to tax. Nothing is to be read in, nothing is to be implied." was approved by Hon'ble Supreme Court in CIT v. Ajax Products Ltd. [1965] 55 ITR 741 (SC) and CIT v. Shahzada Nand & Sons [1966] 60 ITR 392 (SC). In view of the foregoing, the contention of the Assessee; that if this claim is not allowed in this year, it will cause hardship to the Assessee because the aforesaid claim of Rs. 1,60,00,000 towards ad hoc provision on account of pay revision has not been claimed by the Assessee in the subsequent years; does not merit any favourable consideration. A claim wrongly made by an Assessee in an earlier year cannot be allowed in that year, merely because the Assessee did not make the claim correctly in a subsequent year. During the pendency of a dispute as to the year in which a claim of the Assessee is to be allowed; a prudent Assessee can make the claim in other year(s), on protective basis, subject to final outcome of such a dispute, by explaining such a protective claim in other year(s). The Assessee, having failed to make protective claim in subsequent year(s) in which it ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....was closed much after the notification issued by the Government of Odisha, therefore, he made provision in the pay revision of Rs. 20.05 crores in the financial year 2008-2009 as per the AS-4 events occurring after the date of balance sheet issued by the ICAI for the preparation and finalisation of the books of accounts in case of companies. From the statement of the ld. AR of the assessee that it was an ascertained liability, which was known at the time of finalization of the books of accounts of the assessee, therefore, it was necessary to make the provisions in the books of accounts of the assessee, this view has not been accepted by the AO and the AO held that it was an unascertained and contingent liability. Being a company, the assessee has to follow the Accounting Standard issued by the ICAI for the preparation and finalization of the books of accounts as per the Companies Act. The assessee company is a State Government Company; therefore, he has to follow the rules and regulation of the Government of Odisha. The State Government of Odisha has issued order in this regard much after the closing of the impugned financial year w.e.f.01.01.2006 for the Sixth Pay Revision. We not....