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The Tax Publishers2020 TaxPub(DT) 4484 (Bang-Trib) INCOME TAX ACT, 1961
Section 37(1)
Where assessee-AOP, engaged in civil construction business, undertook contract for construction of metro lines in Bangalore and claimed provisions for future expenses, and contended that provisions were subsequently debited at year end of the year as expenditure were incurred by assessee in respect of the same, matter was remanded back to AO to verify submissions of assessee.
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Business expenditure - Allowability - Assessee-AOP engaged in civil construction business undertook contract for construction of metro lines - Provisions for future expenses, whether allowable
Assessee was an AOP carrying on business of civil construction. It claimed provisions for future expenses, which was disallowed by AO on allegation that such type of contingent liabilities were not deductible. Assessee contended that similar provision was made for expenditure in previous assessment years and was allowed. Held: Nature of provisions considered by Tribunal in preceding years were not similar to future claim provided for by assessee during relevant year under consideration. Assessee submitted details of work for which amount was incurred by assessee in preceding year, against which provision was made. Assessee also demonstrated that provisions were subsequently debited at the end of the year as expenditure were incurred by assessee in respect of the same. In interest of justice, issue was remanded back to AO to verify the submissions of assessee in light of the contract entered for construction of metro lines in Bangalore with BMRCL.
REFERRED : Rotork Controls India (P) Ltd. v. CIT 2009 TaxPub(DT) 1730 (SC), Indian Molasses Company Private Limited v. CIT (1959) 37 ITR 66 (SC) : 1959 TaxPub(DT) 170 (SC), CIT v. Micro Land Ltd. (2012) 347 ITR 613 (Karn) : 2012 TaxPub(DT) 1570 (Karn-HC) and Asstt. CIT v. CEC. SOMA CICI JV 2019 TaxPub(DT) 4674 (Bang-Trib).
FAVOUR : Matter remanded.
A.Y. : 2013-14
IN THE ITAT, BANGALORE BENCH
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