2020 (12) TMI 1277

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....-10. The appeal was admitted by a bench of this Court vide order dated 06.12.2017 on the following substantial question of law: (i) The Tribunal, in holding that the Appellant had failed to demonstrate either before the lower authorities or before it that the liability had accrued during the year, arrived at a finding that was contrary to the material placed on record and thus perverse? (ii) The tribunal in holding that substantial provisions were reversed in subsequent years, gave a finding that was perverse inasmuch as it was contrary to the material on record before it and consequently committed a grave error in observing that this would prove that the liability had not been estimated with reasonable accuracy? (iii) The tribunal co....

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....cial year. In the next year, the provisions were reversed and a fresh provision was created. Thus, for the Assessment Year 2009-10, the machineries, which were sold but for which erection and commissioning was not done as on 31.03.2009, a provision was created while reversing the provision created for the previous year. 3. The assessee filed return of income for Assessment Year 2009-10, in which deduction of an amount of Rs. 28,10,905/- was claimed and while doing so, it had added back the provision for a sum of Rs. 40,73,440/- made in the preceding year. Thus, the net amount under the head in fact, was an addition of Rs. 12,62,535/- to the income and not a claim for deduction per se. The Assessing Officer by an order dated 23.12.2011 inte....

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....n and commissioning for the succeeding year is provided for at the end of each financial year. It is also pointed out that while making claim for financial year 2008-09 the assessee had added back the provision made in the preceding year amounting to Rs. 40,73,440 and created fresh provision for an amount of Rs. 28,10,905/- towards installation charges. It is also argued that in other words it is in fact an addition to an income of Rs. 12,62,535/- and not a claim for deduction. It is also argued that if provision created is compared with actual expenses there is hardly any difference which demonstrates that the creation of provision is scientific and the assessee has been following the aforesaid method of provisioning consistently for nearl....

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....e the Commissioner of Income Tax (Appeals), the assessee had produced a comparative statement showing the sales in which erection is pending, the corresponding provisioning, the actual expenses incurred in the next year for financial years 2005-06 to 2011-12 and ledger account extracts of the provisions for erection and commissioning, which evidences reversals as on the last day of financial year. However, the Commissioner of Income Tax (Appeals) has not taken note of the aforesaid material produced by the assessee. The tribunal has held that the assessee has failed to demonstrate either before the Commissioner of Income Tax (Appeals) or before the tribunal that liability has accrued during the year and the fact that the substantial provisi....