TaxTMI 
TaxTMI 
2026 (4) TMI 27
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....consequential order had been passed by the AO dated 31.08.2016, copy of which is placed before the ITAT. Considering the same, the order passed by ITAT was recalled and the appeal of the assessee fixed for adjudication afresh on merits, vide order in MA No.94/Ahd/2025, dated 18.12.2025. The present appeal, accordingly, has come up for hearing before us. 3. The order of the Ld.PCIT reveals that he found the assessment order passed in the case of the assessee u/s.143(3) of the Act to be erroneous so as to cause prejudice to the Revenue for having wrongly allowed the assessee a claim of alleged unascertained liability amounting to Rs. 5,24,57,202/- while computing its book profits liable to tax under the minimum alternate tax regime u/s.115JB of the Act. The Book Profits had been determined at Rs. 3,94,60,143/- in the assessment order. 4. The Ld. PCIT noted that the assessee had provided for DPCO (The Drugs (Price Control) Order) liability in its book amounting to Rs. 2,62,28,601/- on the basis of amount pre-deposited as directed by the Hon'ble Gujarat High Court and another Rs. 2,62,28,601/- provided as DPCO liability on the basis of Bank Guarantee given as directed by the ....
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....mand by interim orders directing the assessee to pay Rs. 2,35,65,805/- out of the total demand raised on it. Vide another interim order dated 31.01.2011, the High Court had directed the assessee to pay 50% of the balance outstanding i.e. Rs. 2,62,28,601/- and to furnish bank guarantee for the balance 50% of Rs. 2,62,28,601/- which the assessee complied with for keeping the recovery proceedings in abeyance. The assessee also stated that the issue before the Hon'ble Gujarat High Court was still pending for adjudication. And that the matter had not travelled to the Hon'ble Supreme Court at all. The assessee further clarified that the Hon'ble Supreme Court issue referred to by the Ld.PCIT was a completely different issue wherein the assessee's appeal in respect of sanction of claim of arrangement of transfer of the assessee's two divisions i.e. Swastik Division and Electronic Division was allowed by the Hon'ble apex court. This, the assessee pointed out, was reflected in Note 5 of Schedule 12 of balance sheet, on the basis of which an audit query has been raised and in response to which, present revisionary proceedings had been initiated on the assessee. The sub....
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....0/- 53,82,913/- Total Amount Paid 2,35,65,805/- 5,24,57,203/- * Vide second interim order, dated 31.01.2011. Hon'ble High Court stayed the recovery of demand with a condition to pay 50% of the balance outstanding i.e. Rs. 2,62,28,601/- (50% of 5,24,57,203/-) & to furnish bank guarantee for the balance 50% of Rs. 2,62,28,601/-. Company complied with the said conditions stipulated by Hon'ble High Court for keeping the recovery proceedings in abeyance. * Only the recovery of demands in question has been stayed and SCAs challenging the demands are still pending for disposal. * Simply because the demands has been challenged, it cannot be said that liability is unascertained, nor it can be said that the liability does not exist. The liability persists. * Company is following mercantile systems of accounting and therefore, the alleged amount was booked in accounts. * Reliance placed upon Hon'ble Gujarat High Court decision in the case of CIT Vs. I.G. Gandhi Silk Mills, (2005), 195 CTR 253 (Guj) wherein Hon'ble Court has held that demand of excise duty, which is challenged by way of writ petition, is not unascertained....
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....page no.20 of the order holding the liability of Rs. 5,24,57,203/- claimed by the assessee under DPCO to have validly accrued during relevant assessment year i.e. A.Y. 2011-12 and liable as deduction u/s. 37(1) of the Act. 9. Ld.DR fairly agreed that the ITAT had held the DPCO liability of Rs. 5.24 Crores to be an ascertained liability for the purposes of computing its income as per the normal provisions of law. 10. In the light of the above fact alone, we hold, there remains no error in the order of the AO for having allowed claim of DPCO liability without examining its character, as held by the Ld.PCIT. The apprehension of the Ld.PCIT that the DPCO liability was an unascertained liability which ought not to be have been allowed for computing Book Profits of the assessee, now no longer remains since the said liability has been held to be ascertained liability by the ITAT eligible for deduction u/s 37(1) of the Act while computing income as per normal provisions in the case of assessee. 11. Further the Ld.PCIT's finding of error also rested on the fact that the issue of DPCO liability arising from the order of the Hon'ble Gujarat High court was settled by the Hon&#....