KALYANI FORDGE LIMITD,PUNE vs. DCIT, CIRCLE14, PUNE

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ITA 51/PUN/2020Status: DisposedITAT Pune28 June 2022AY 2013-143 pages

In favour of the Revenue: the assessee's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that a provision for a liability can be allowed as a deduction only if there is some material to support the estimation of such a provision. Since the assessee failed to provide any such supportive material, the deduction claim was not allowed.

What were the facts?

The assessee claimed a deduction for a provision made for an out-of-court settlement amounting to Rs. 16.60 lakhs. The assessee's counsel admitted that the impugned payment had not actually been made to the employee(s).

What were the issues?

Whether a provision made for a future liability, which has not yet been discharged and lacks supporting material, is allowable as a deduction.

Which sections of the Income-tax Act were involved?

Section 143(3)

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(1)Show list

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Income Tax Appellate Tribunal, PUNE BENCH “A”, PUNE

Before: SHRI S. S. GODARA & SHRI DR. DIPAK P. RIPOTE

For Appellant: Shri C. H. Naniwadekar
For Respondent: Shri Arvind Desai
Hearing: 13.06.2022Pronounced: 28.06.2022

ORDER

PER S. S. GODARA, JM:

1.

This assessee’s appeal for assessment year 2013-14 arises against the CIT(A)-9, Pune’s order dated 22.11.2019 passed in case no. PN/CIT(A)-7- trf. from/CIT(A)- 9 trf. In/10470/17-18/147 involving proceedings u/s 143(3) of the Income Tax Act, 1961; in short “the Act”. Heard both the parties. Case file perused.

2.

It emerges at the outset that the hardly any need for us to delve deeper in the relevant factual matrix so far as the assessee’s sole substantive grievance claiming deduction of provision made for out Rs.16.60 lakhs and disallowed in both the lower proceedings, is concerned. 3. Learned counsel was fair enough at the outset that the assessee had not actually made the impugned payment to its so called employee(s) which forms the impugned claim herein. It thus turns out to be an instance wherein this assessee chose to make the impugned provision followed by its deduction claim. Hon’ble apex court’s landmark decision in Bhart Earth Movers vs. CIT (2000) 245 ITR 428 (SC) has indeed settled the law regarding allowability of a provision made on estimation basis for a liability which is claimed as present and actually discharged in future. Their lordships however add a caveat that some material must exist in support of such an estimation. Mr. Naniwadekar could hardly takes us through any such supportive material justifying the impugned provision. We thus accept the Revenue’s vehement arguments supporting the impugned disallowance/addition of Rs.16.60 lakhs for this precise reason alone. 4. This assessee’s appeal is dismissed in above terms. Order pronounced on this 28th day of June, 2022. Sd/- Sd/- (DR. DIPAK P. RIPOTE) (S. S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER पुणे / Pune; �दनांक / Dated : 28th June, 2022. Sujeet (DOC)

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