TaxTMI 
TaxTMI 
2019 (3) TMI 1909
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....on issue involved in the appeals for the A.Y. 2011-12 and 2012-13 is liquidated damages paid towards incomplete contracts. For the A.Y.2011-12, the assessee had agreed for the addition of liquidated damages and for the A.Y. 2012-13, the AO made the addition of liquidated damages for an amount of Rs. 1,84,61,840/-. 3. Briefly stated the facts related to the case are that the assessee is a public limited company engaged in the business of manufacture of cement and engineering goods. The company is debiting liquidated damages to Profit & Loss account year after year on accrual basis and the department has allowed the expenditure relating to liquidated damages on completed contracts and disallowed the damages relatable to incomplete contract....
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....respective of actual payment. To test it otherwise, whether on the aforesaid clause, buyer is to disclose as in income on account of the liquidated damages by maintaining mercantile system of accounting or not. From the aforesaid clause, no doubt, in our view the payee is required to disclose as an income, as this term clearly stipulates the accrual of income. In our view, the terms clearly stipulate the obligation to make payment. Under the circumstances, we are of the view that the payment of liquidated damages or accrual thereof does not depend upon actual delivery of goods. Aforesaid method of making a provision is also legally permissible as it has been held by the Hon'ble Supreme Court of India in case of BILAHARI INVESTMENT P. LTD ).....
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....The assessee also submitted the affidavit to that extent. In the instant case, on identical facts on the same issue, the Special Bench has decided the issue in favour of the assessee and the Hon'ble High Court has upheld the order of the Tribunal and dismissed the appeal of the revenue. During the appeal hearing, the Ld.AR argued that the liability regarding the liquidity damages arose by virtue of terms of contract between the assessee and the customer and the delay in supply would attract the damages and the liability is ascertainable each year and the assessee is required to make payment of damages to the contractee. Such liability is debited to the Profit & Loss account under the head 'liquidity damages'. Since, the issue is settle....
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....as filed appeal before this Tribunal. 8. We have heard both the parties and perused the material placed on record. The Ld.CIT(A) given finding that the difference amount of Rs. 5,34,000/- was offered as income from business in the Engineering Unit. For the sake of clarity and convenience, we extract relevant part of the order of the Ld.CIT(A) which reads as under : The balance of Rs. 30,910/- (B-A) (Rs. 5,65,457 (-) Rs. 5,34,547) related to a TDS certificate which was wrongly treated as rental income though payment was made to the contractors (vide TDS certificate No.2010/0000001357). Necessary reconciliation in this regard was submitted during assessment proceedings. Hence, the entire rental receipts have been offered to tax un....
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....epreciation in the earlier years, there is no reason to restrict the depreciation @15% in the impugned assessment year without having any fresh material to show that the vehicle was not a commercial vehicle. For the sake of clarity and convenience, we extract the relevant part of the order of the Ld.CIT(A) which is available in page No.5 and 6 reads as under : "I fail to persuade myself to agree with the above contention of Assessing Officer. Once an asset is eligible for a particular rate of depreciation as per provisions of the Act read with Depreciation Table, then for subsequent Assessment Years, depreciation should be allowed on the same percentage on W.D.V. (Written Down Value). If the intention of the statute is to give high....