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| The Tax Publishers2020 TaxPub(DT) 1982 (Mum-Trib) INCOME TAX ACT, 1961
Section 37(1)
Provision made for likely loss on sales return cannot be allowed because expenditure had not crystallized during the year and was an anticipated loss. However, if such loss has actually arisen in subsequent assessment year due to sales return, AO was directed to verify and grant consequential relief.
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Business expenditure - Allowability - Provision for sales return -
Assessee has claimed Rs. 40,90,000 on account of provision for sales return. AO disallowed deduction. Held: Amount in dispute was a provision made for likely loss on sales return. Therefore, it was quite clear that expenditure had not crystallized during the year and was an anticipated loss. That being the case, it could not be allowed. However, if such loss has actually arisen in subsequent assessment year due to sales return, AO was directed to verify and grant consequential relief.
REFERRED :
FAVOUR : Matter remanded.
A.Y. :
INCOME TAX ACT, 1961
Section 41(1)
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