Haryana Agro Industries Corporation, Panchkula V. ACIT, Panchkula

ITA 119/CHANDI/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9906 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 4 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 04-04-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 02-02-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Assessee Lawyers: B K NOHRIA
• Section: 43B; 37(1); 145; 37

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO. 119/CHD/2015 ASSESSMENT YEAR: 2011-12 HARYANA AGRO INDUSTRIES CORPORATION VS. THE ACIT BAY NO. 15-20, SECTOR 4 PANCHKULA CIRCLE PANCHKULA PANCHKULA PAN NO. AAACH4686C (APPELLANT) (RESPONDENT) APPELLANT BY : SH. B.K. NOHRIA RESPONDENT BY : SH. MANJIT SINGH DATE OF HEARING : 04/04/2016 DATE OF PRONOUNCEMENT : 24/06/2016 ORDER PER ANNAPURNA GUPTA A.M. THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A), PANCHKULA DT. 26/11/2014. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF AP PEAL: 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE THE LEARNED CIT(A) PANCHKULA HAS ERRED IN LAW AND FACTS IN UPHOLDING T HE ADDITION OF RS. 39,21,960/- ON ACCOUNT OF FINANCIAL ASSISTANCE U/S 43B OF THE IT ACT, 1961 THOUGH NOT COVERED BY SAID SECTION AS IT IS NOT A S TATUTORY LIABILITY AND A VOLUNTARY LIABILITY AGREED BY THE ASSESSEE TO BE PA ID TO THE FAMILIES OF THE DECEASED EMPLOYEES OF THE ASSESSEE. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE THE LEARNED CIT(A) PANCHKULA HAS ERRED IN LAW AND FACTS IN UPHOLDING T HE ADDITION OF RS. 80,18,000/- ON ACCOUNT OF SERVICE CHARGES ON GUNNY BAGS PAYABLE TO FOOD AND SUPPLIES DEPARTMENT, GOVT. OF HARYANA BEING PAY ABLE FOR PROCUREMENT OF GUNNY BAGS BY THE SAID DEPARTMENT. 2. WE SHALL FIRST TAKE UP GROUND NO. 2 RAISED BY TH E ASSESSEE WHICH IS AGAINST THE UPHOLDING OF THE ADDITION OF RS. 80,18,000/- ON ACC OUNT OF PROVISION OF SERVICE CHARGE ON GUNNY BAGS PAYABLE TO FOOD AND SUPPLIES DEPARTME NT GOVERNMENT OF HARYANA, FOR THE PROCUREMENT OF GUNNY BAGS. 3. THE FACTS RELATING TO THE ISSUE ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO NOTED THAT THE ASSESSEE HAD MADE A PROVISION FOR SERVICE CHARGE 2 ON GUNNY BAGS AMOUNTING TO RS. 80,18,000/-. ON BEIN G ASKED TO EXPLAIN THE SAME, THE ASSESSEE SUBMITTED THAT ON THE PROCUREMENT OF GUNNY BAGS SERVICE CHARGE @ 1% WAS PAYABLE TO FOOD & SUPPLIES DEPARTMENT, GOVERNMENT O F HARYANA AND THE EXPENDITURE HAD BEEN DEBITED TO WHEAT SINCE THE SAME RELATED TO IT. THE AO REJECTED THE ASSESSEES CONTENTION ON THE GROUND THAT IN THE FIR ST PLACE THE PROVISION MADE WAS NOT ALLOWABLE AS PER THE INCOME TAX ACT AS NO LIABILIT Y HAD BEEN INCURRED BY THE ASSESSEE ON THIS ACCOUNT. THE AO FURTHER HELD THAT IN ANY CA SE THE EXPENDITURE WAS ALLOWABLE IN THE YEAR OF PAYMENT IRRESPECTIVE OF THE METHOD OF A CCOUNTING FOLLOWED BY THE ASSESSEE. 4. AGGRIEVED BY THE SAME THE ASSESSEE FILED AN APPE AL BEFORE THE LD. CIT(A) WHO UPHELD THE ORDER OF THE AO BY RELYING UPON HIS ORDE R IN THE ASSESSES OWN CASE FOR AY 2010-11 IN WHICH HE HAD HELD AS FOLLOWS : 7.2 I HAVE GONE THROUGH THE FACTS OF THE CASE AND THE WRITTEN SUBMISSION FILED BY APPELLANT. THIS ISSUE IS COVERED IN THE APPELLANTS OWN CASE FOR THE A.Y. 2010-11 VIDE ORDER DATED 27.12.2013 IN APPEAL NO. 99/PKL/12-13. THE FI NDINGS ARE REPRODUCED AS UNDER:- 7. REGARDING GROUND NO. 3 THE APPELLANT SUBMITTED THAT THE ASSESSEE PAYS SERVICE CHARGES @ 1% ON THE PROCUREMENT OF GUNNY BAGS THROU GH FOOD & SUPPLIES DEPARTMENT, GOVERNMENT OF HARYANA WHICH HAS BEEN PROVIDED ON AC CRUAL BASIS AND ACCORDINGLY NO OBSERVATION HAS BEEN MADE BY THE C&AG IN THEIR COMM ENTS ON THIS ISSUE. A COPY OF THE VOUCHER WAS ALSO SUBMITTED. SIMILAR OBJECTION WAS M ADE BY THE C&AG IN THEIR COMMENTS FOR THE ASSESSMENT YEAR 2008-09 AND THE AO HAD PROP OSED TO ADD THE EXPENSES ON THIS ISSUE AS THE SAME WERE NOT PROVIDED ON ACCRUAL BASI S. AS SUCH THE APPELLANT SUBMITTED THAT THE SERVICE CHARGES AS PER NOTE PROVIDED ON AC CRUAL BASIS BE ALLOWED. THE APPELLANT FURTHER SUBMITTED ON ALLOWABILITY OF SUCH EXPENSES U/S 37 OF THE ACT AS GIVEN IN PARA 5.2(SUPRA). 7.1 FROM THE NOTES TO THE ACCOUNT AT ITEM NO. (IX), THE AO NOTED THAT COMPANY HAS MADE PROVISION OF SERVICE CHARGE @1% ON THE PROCUREMENT OF THE GUNNY BAGS AMOUNTING TO RS. 20.11 LACS FOR THE YEAR 2009-10 AS PAYABLE TO DIREC TOR FOOD & SUPPLY. THE AO DISALLOWED THE PROVISION THAT SUCH PROVISION IS NOT ALLOWABLE AS PER THE ACT AND NO LIABILITIES HAVE BEEN INCURRED ON THIS ACCOUNT. WHEREAS THE APPELLAN T HAS SUBMITTED THAT PROVISION FOR PAYMENT OF SERVICE CHARGES @1% ON THE PROCUREMENT O F GUNNY BAGS WAS PROVIDED ON ACCRUAL BASIS ON WHICH EVEN THE C&AG IN THEIR AUDIT HAS MADE NO OBSERVATION. THE APPELLANT HAS REITERATED THE ALLOWABILITY OF EXPEND ITURE AS PER SECTION 37 OF THE ACT WHICH HAS BEEN BOOKED INTO ACCOUNTS ON ACCRUAL BASIS AS T HE APPELLANT WAS FOLLOWING THE MERCANTILE SYSTEM OF ACCOUNTING. 7.2 AFTER CONSIDERATION OF FACTS OF THE CASE AND AP PELLANT SUBMISSION, IT IS NOTED THAT THE PROVISION HAS BEEN MADE FOR SERVICE CHARGE ON THE P ROCUREMENT OF GUNNY BAGS WHICH MEANS A STOCK OF GUNNY BAGS WAS TO BE PROCURED WITH AN ADDITION OF A FEE (SERVICE CHARGE). HERE, IT IS RELEVANT TO MENTION THAT SECTI ON 145 OF THE ACT OBLIGES EVERY ASSESSEE TO MAINTAINED, SUBJECT TO ACCOUNTING STANDARDS WHIC H MAY BE NOTIFIED BY THE CENTRAL GOVERNMENT, BOOKS OF ACCOUNT ON CASH OR MERCANTILE BASIS. BUT SECTION 145A OF THE ACT BEGINS WITH NON-OBSTANTE CLAUSE AND PRESCRIBES THAT THE VALUE OF GOOD SHALL BE FURTHER ADJUSTED TO INCLUDE THE AMOUNT OF ANY TAX, DUTY, CE SS OR FEE ACTUALLY PAID. 7.3 IT IS WORTHWHILE TO QUOTE SECTION 145-A DEALING WITH METHOD OF ACCOUNTING IN CERTAIN CASES WHICH READS AS UNDER:- 145 A- NOTWITHSTANDING ANYTHING CONTRARY CONTAINED IN SECTION 145- (A) THE VALUATION OF PURCHASE AND SALE OF GOODS AND INVENTORY FOR THE PURPOSE OF DETERMINING THE INCOME CHARGEABLE UNDER THE HEAD P ROFITS AND GAINS OF BUSINESS OR PROFESSION SHALL BE - (I) IN ACCORDANCE WITH THE METHOD OF ACCOUNTING REG ULARLY EMPLOYED BY THE ASSESSEE; AND 3 (II) FURTHER ADJUSTED TO INCLUDE THE AMOUNT OF ANY TAX, DUTY, CESS OR FEE(BY WHATEVER NAME CALLED)ACTUALLY PAID OR INCURRED BY THE ASSESSEE TO BRING THE GOODS TO THE PLACE OF ITS LOCATION AND CONDITION AS ON THE DATE OF VALUATION. EXPLANATION- FOR THE PURPOSE OF THIS SECTION, ANY T AX, DUTY, CESS OR FEE (BY WHATEVER NAME CALLED) UNDER ANY LAW FOR THE TIME BEING IN FORCE, SHALL INCLUDE ALL SUCH PAYMENT NOTWITHSTANDING ANY RIGHT ARISING AS A CONSEQUENCE TO SUCH PAYMENT. THIS PROVISION WAS INTRODUCED IN 1999 AND OVER WRIT ES OTHER PROVISIONS. ITS OBJECTS INCLUDE FOR THE PURPOSE OF VALUATION OF GOODS, THE ACTUAL AMOUN T OF TAX, DUTY, CESS OR FEE, PAID BY THE ASSESSEE. THE SUB CLAUSE (II) OF CLAUSE (A) OF SECT ION 145A INCLUDES THE AMOUNT OF FEE BY WHATEVER NAMED CALLED. IN THE INSTANT CASE, THE VAL UATION OF GOODS INCLUDE 1% SERVICE CHARGES, HOWEVER, THE SAME HAS NOT BEEN ACTUALLY PA ID. UNLIKE IN THE CASE OF SECTION 43B WHICH MANDATES THE INCLUSION, IN THE COMPUTATION OF INCOME, AMOUNTS PAID TOWARDS CERTAIN LIABILITIES INCLUDING TAX BUT NOT ACTUALLY ARISING OR ACCRUING AT THE TIME OF PAYMENT. THE PROVISION OF SECTION 145A DIRECTS INCLUSION OF AMOUNTS OF TAX, DUTY, FEE, ETC. ACTUALLY PAID FOR PURPOSE OF VALUATION OF GOODS. IN THIS REG ARD, I PLACE RELIANCE ON THE DECISION OF HONBLE HIGH COURT OF DELHI IN THE CASE OF CIT VS. LUXMI SUGAR MILLS CO. LTD. (2013) 32 TAXMANN.COM 379 WHERE THE HONBLE HIGH COURT HELD T HAT PROVISION OF SECTION 145A DIRECTS INCLUSION OF AMOUNTS OF TAX, DUTY ETC. ACTUALLY PAI D FOR THE VALUATION ALONE. 7.4 REGARDING THE APPELLANTS CONTENTION THAT THE P ROVISION HAS BEEN MADE ON ACCRUAL BASIS AND NO OBSERVATION HAS BEEN MADE BY C7AG IN T HEIR COMMENTS ON AUDIT CANNOT OVER RIDE THE APPLICABLE PROVISIONS OF THE INCOME T AX ACT. THE HONBLE SUPREME COURT IN THE CASE OF SUTLEJ COTTON MILLS LTD. VS. CIT 116 IT R 1 HELD THAT THE MATTER OF TAXABILITY CANNOT BE DECIDED ON THE BASIS OF THE ENTRIES WHICH THE AS SESSEE MAY CHOOSE TO MAKE IN HIS ACCOUNTS BUT HAS TO BE DECIDED IN ACCORDANCE WITH T HE PROVISIONS OF THE LAW. IN ANOTHER CASE OF SOUTHERN TECHNOLOGIES LTD. VS. JCIT 320 ITR 577 THE HONBLE SUPREME COURT HELD THAT THE RBI DIRECTIONS AND THE INCOME TAX ACT OPER ATE IN DIFFERENT AREAS. THESE DIRECTIONS HAVE NOTHING TO DO WITH THE COMPUTATION OF TAXABLE INCOME. THESE RBI DIRECTIONS CANNOT OVER RULE THE PERMISSIBLE DEDUCTION OR THEIR EXC LUSION UNDER THE INCOME TAX ACT. IT IS WELL SETTLED THAT THE ACCOUNTING POLITICS FOLLOWED BY A COMPANY CAN BE CHANGED, UNLESS THE ASSESSING OFFICER COMES TO THE CONCLUSION THAT SUCH CHANGE WOULD RESULT IN UNDERSTATEMENT OF PROFIT. THEREFORE, THE INCOME TAX ACT IS AN INDEPENDENT CODE IN ITSELF, THE TOTAL INCOME OR LOSS TO BE COMPUTED AS TO BE IN ACCORDANCE WITH THE PROVISIONS OF THE I.T. ACT. IN VIEW OF ABOVE JUDICIAL PRONOUNCEMENTS, ANY DIRECTION OF GOVERNMENT OF HARYANA OR THE C&AG CANNOT OVER RIDE THE TAXABILITY OF INCOME IN ACCORDANCE WITH THE PROVISIONS OF INCOME TAX ACT. 7.5 IN VIEW OF ABOVE FACTS OF THE CASE, APPLICABILI TY OF PROVISIONS OF SECTION 145A REGARDING THE VALUATION OF GOODS AND JUDICIAL PRONOUNCEMENTS RELIED UPON, I AM OF THE OPINION THAT THE PROVISION MADE FOR SERVICE CHARGES ON PROCUREME NT OF GUNNY BAGS AMOUNTING TO RS. 20.11 LACS IS NOT ALLOWABLE AS IT DOES NOT GIVE THE TRUE PICTURE OF THE TAXABLE PROFIT DURING THE YEAR. HENCE, THIS GROUND OF APPEAL IS DISMISSED . 5. AGGRIEVED BY THE SAME THE ASSESSEE FILED THE PRE SENT APPEAL BEFORE US. 6. BEFORE US LD. AR REITERATED THE CONTENTION MADE BEFORE THE AO / CIT(A) WHILE THE LD. DR RELIED UPON THE ORDER OF LD. CIT(A) 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL PLACED ON RECORD BEFORE US. 8. WE FIND THAT THIS ISSUE HAS ALREADY BEEN DEALT W ITH BY US IN THE CASE OF THE ASSESSEE FOR ASSESSMENT YEAR 2010-11 IN ITA NO. 16 4/CHD/2014 WHEREIN THE PROVISION CREATED FOR SERVICE CHARGE HAS BEEN DISALLOWED BY H OLDING AS FOLLOWS : 10. THE ISSUE ARISING IN THE PRESENT APPEAL IS THE ALLOWABILITY OF PROVISION CREATED IN THE BOOKS OF THE ASSESSEE FOR SERVICE CH ARGE PAYABLE ON GUNNY BAGS. IT IS IMPERATIVE AT THIS JUNCTURE TO UNDERSTAND THE POSITION OF LAW WITH REGARD TO ALLOWABILITY OF EXPENSES. DEDUCTIONS CAN BE PERMITTED ONLY IN RESPECT OF EXPE NSES WHICH ARE FOUND TO HAVE BEEN INCURRED IN THE RELEVANT ACCOUNTING PERIO D. THE DETERMINATION OF THE QUESTION WHETHER THE ASSESSEE HAD INCURRED THE EXPE NDITURE DURING THE RELEVANT 4 ACCOUNTING PERIOD IS AN INDISPENSABLE PRELIMINARY S TEP. THE PRINCIPLES THAT SHOULD NORMALLY BE FOLLOWED ARE WELL SETTLED BY THE DECISI ON OF THE SUPREME COURT IN KEDAR NATH JUTE MANUFACTURING CO. LTD. VS. CIT (197 1) 82 ITR 363(SC) NAMELY IN ORDER TO BE ENTITLED TO DEDUCTION, THE EXPENSE MUST BE INCURRED OR THE LIABILITY FOR EXPENSE MUST HAVE INCURRED IN THE YEAR IN QUESTION DEPENDING UPON THE SYSTEM OF ACCOUNTING FOLLOWED BEING MERCANTILE OR CASH. TH US IN ORDER THAT AN ITEM OF EXPENDITURE SHOULD BE ENTITLED TO DEDUCTION U/S 37 IT MUST HAVE BEEN INCURRED FOR DISCHARGING A LIABILITY ACTUALLY EXISTING DURING TH E ACCOUNTING PERIOD. THE MERE SETTING APART OF AN AMOUNT TO MEET A LIABILITY CANN OT BEAR THE CHARACTER OF EXPENDITURE TILL THE LIABILITY BECOMES REAL. 11. IN THE PRESENT CASE THE FACTS BEFORE US ARE TH AT THE PROVISION OF 1% ON ACCOUNT OF SERVICE CHARGES OF CERTAIN GUNNY BAGS PR OCURED FROM DFS HARYANA, HAS BEEN CREATED BY THE ASSESSEE AMOUNTING TO RS. 2 0.11 LACS WITH NO UNDERLYING AGREEMENT SUPPORTING THE CREATION OF THE CHARGE. NO SUCH DOCUMENT HAS BEEN PRODUCED BEFORE US, EVEN AFTER A SPECIFIC QUERY RA ISED BY THE BENCH IN THIS REGARD. CLEARLY THEREFORE THE ASSESSEE HAS NOT BEEN ABLE TO ESTABLISH INCURRING THE LIABILITY IN THE FIRST PLACE. THEREFORE NO QUESTION ARISES OF INCURRING THE EXPENSES WHAT TO SAY ABOUT CREATING A PROVISION OF THE SAME. THE PROVISION OF SECTION 37(1) ARE VERY CLEAR AND IT IS SETTLED LAW THAT ONUS IS O N THE ASSESSEE TO ESTABLISH HAVING INCURRED ANY EXPENDITURE. HAVING FAILED ON THIS GRO UND ALONE, WE THEREFORE HOLD THAT THE ASSESSEE IS NOT ENTITLED TO CLAIM ALLOWANC E OF EXPENDITURE ON ACCOUNT OF SERVICE CHARGES. THE BASIS OF ARRIVING AT THE FIGUR E OF 20.11 LACS HAS ALSO NOT BEEN PROVIDED BY THE ASSESSEE. THEREFORE WE HOLD THAT TH E ASSESSEE IS NOT ENTITLED TO ANY ALLOWANCE ON ACCOUNT OF PROVISION CREATED FOR S ERVICE CHARGE AND WE THEREFORE UPHOLD THE ORDER OF LD. CIT(A) IN THIS BE HALF. THE FACTS IN THE PRESENT CASE, WE FIND, ARE IDENTIC AL TO THAT IN THE PRECEDING YEAR. NO DOCUMENT EVIDENCING THE CREATION OF THE CHARGE WAS PRODUCED BEFORE US IN THE PRESENT CASE ALSO, DESPITE A SPECIFIC QUERY RAISED BY THE BENCH IN THIS REGARD. THE ISSUE IS COVERED BY THE ORDER OF THE HONBLE ITAT BENCH C HANDIGARH IN THE PRECEDING YEAR AND THEREFORE RESPECTFULLY FOLLOWING THE SAME WE HO LD THAT THE PROVISION FOR SERVICE CHARGE AMOUNTING TO RS. 80,18,000/- IS NOT ALLOWABL E. THIS GROUND OF APPEAL OF THE ASSESSEE IS THEREBY DISMISSED. 9. GROUND NO. 1 RAISED BY THE ASSESSEE IS AGAINST T HE ADDITION OF RS. 39,21,960/- ON ACCOUNT OF FINANCIAL ASSISTANCE PROVIDED BY THE ASS ESSEE. 10. BRIEF FACTS RELATING TO THE ISSUE ARE THAT DURI NG ASSESSMENT PROCEEDINGS THE AO NOTED THAT AS PER ITEM NO. 9 OF THE AUDIT REPORT, T HE ASSESSEE CORPORATION HAD MADE PROVISION OF RS. 39.22 LACS WITH RESPECT TO FINANCI AL ASSISTANCE PAYABLE TO DEPENDENTS OF DECEASED EMPLOYEES. THE ASSESSEE WAS ISSUED SHOW CA USE NOTICE AS TO WHY THE SAME BE NOT DISALLOWED. ON DIRECTION GIVEN BY THE ADDL. CIT, SOUGHT BY THE ASSESSEE UNDER SECTION 144A OF THE ACT, THE ASSESSEE WAS REQUIRED TO FURNISH DOCUMENTARY PROOF OF THE PAYMENTS MADE. SINCE THE ASSESSEE FAILED TO PRODUCE ANY SUCH PROOF THE AO REJECTED THE CLAIM OF THE ASSESSEE AND MADE ADDITION OF THE SAME TO THE INCOME OF THE ASSESSEE. 5 11. DURING THE COURSE OF APPELLATE PROCEEDING BEFOR E THE LD. CIT(A), THE ASSESSEE CONTENDED THAT THE IMPUGNED AMOUNT WAS NOT COVERED UNDER SECTION 43B OF THE ACT. THE ASSESSEE ALSO SUBMITTED THE COPY OF THE VOUCHER ALONWITH DETAILS OF THE AMOUNT PAYABLE EMPLOYEE WISE, AS SUBMITTED TO THE AO AT TH E TIME OF THE ASSESSMENT. LD. CIT(A) HELD THAT THE DISALLOWANCE MADE WAS NOT COVE RED BY SECTION 43B OF THE ACT AND TO THAT EXTENT THE ORDER OF THE AO WAS CORRECTE D. THE LD. CIT(A) FURTHER HELD THAT BEING A PROVISION MADE FOR FUTURE LIABILITY THE SAM E WAS NOT ALLOWABLE SINCE THE LIABILITY TO INCUR THE EXPENSES HAD NOT ARISEN DURING THE YEA R UNDER CONSIDERATION. THEREFORE THE DISALLOWANCE OF RS. 39,21,960/- ON ACCOUNT OF PROVI SION FOR FUTURE PAYMENT OF FINANCIAL ASSISTANCE WAS UPHELD BY THE LD. CIT(A). 12. AGGRIEVED BY THE SAME THE ASSESSEE FILED THE PR ESENT APPEAL BEFORE US. 13. BEFORE US LD. AR DREW OUR ATTENTION TO THE VOUC HER FOR THE IMPUGNED PROVISION FOR FINANCIAL ASSISTANCE OF RS. 39,21,960/- CREATED BY THE ASSESSEE AND FURTHER TO THE DETAILS OF FINANCIAL ASSISTANCE PAID TO VARIOUS EMP LOYEES AND ANNEXED ALONGWITH THE VOUCHER. LD. AR ALSO DREW OUR ATTENTION TO THE NOTI FICATION ISSUED BY THE HARYANA GOVT. GENERAL ADMINISTRATION DEPARTMENT DT. 01/08/2006 WH ICH STIPULATED THE PROVISION OF FINANCIAL ASSISTANCE TO THE FAMILY OF GOVERNMENT EM PLOYEES OF THE DEPARTMENT OF ANY GOVERNMENT EMPLOYEE. LD. AR STATED THAT ON THE BASI S OF THE ABOVE NOTIFICATION THE ASSESSEE HAD CALCULATED THE FINANCE ASSISTANCE PAYA BLE AMOUNTING TO RS. 39,21,960/- ON ACCOUNT OF FOUR EMPLOYEES AS DETAILED IN THE LIS T ANNEXED TO THE VOUCHER. LD. AR THEREFORE STATED THAT THE PROVISION CREATED BY THE ASSESSEE WAS A ALLOWABLE EXPENSES AS PER THE PROVISION OF SECTION 37 OF THE ACT. 14. LD. DR ON THE OTHER HAND RELIED UPON THE ORDER OF THE LD. CIT(A). 15. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW. 16. THE ISSUE IN THIS GROUND RAISED BY THE ASSESSEE RELATES TO THE ALLOWABILITY OF EXPENDITURE. THE LAW ON THIS ISSUE IS SETTLED. IF A BUSINESS LIABILITY HAS DEFINITELY ARISEN IN THE ACCOUNTING YEAR, THE DEDUCTION SHOULD BE ALLOWE D. WHAT SHOULD BE CERTAIN IS THE INCURRING OF THE LIABILITY. IT SHOULD ALSO BE CAPAB LE OF BEING ESTIMATED WITH REASONABLE CERTAINTY. IF THESE REQUIREMENTS ARE SATISFIED THE LIABILITY IS FIRM IN PRAESENTI AND THUS 6 DEDUCTIBLE. CONTINGENT EXPENDITURES ON THE OTHER HA ND, WHICH MAY OR MAY NOT ARISE, ARE NOT ALLOWABLE. BHARAT EARTH MOVERS VS. CIT(2000 ) 245 ITR 428(SC). 17. THE FACTS EMERGING IN THE PRESENT CASE ARE THAT AS PER THE NOTIFICATION OF THE GOVERNMENT OF HARYANA, THE ASSESSEE WAS REQUIRED TO PROVIDE FINANCIAL ASSISTANCE TO THE FAMILY OF EMPLOYEES ON THE DEATH OF THE EMPLOYE E EQUIVALENT TO THE PAY AND OTHER ALLOWANCES DRAWN BY THE DECEASED EMPLOYEE IN THE N ORMAL COURSE. PARA NUMBER 5 OF THE NOTIFICATION WHICH OUTLINES CRITERIA FOR FINANC IAL ASSISTANCE IS REPRODUCED HERE UNDER: 5. (1) ON THE DEATH OF ANY GOVERNMENT EMPLOYEE, THE FAMILY OF THE EMPLOYEE WOULD CONTINUE TO RECEIVE AS FINANCIAL ASSISTANCE A SUM E QUAL TO THE PAY AND OTHER ALLOWANCES THAT WAS LAST DRAWN BY THE DECEASED EMPLOYEE IN THE NORMAL COURSE WITHOUT RAISING A SPECIFIC CLAIM:- (A) FOR A PERIOD OF FIFTEEN YEARS FROM THE DATE OF DEATH OF THE EMPLOYEE, IF THE EMPLOYEE AT THE TIME OF HIS DEATH HAD NOT ATTAINED THE AGE O F THIRTY FIVE YEARS; (B) FOR A PERIOD OF TWELVE YEARS OR TILL THE DATE T HE EMPLOYEE WOULD HAVE RETIRED FROM GOVERNMENT SERVICE ON ATTAINING THE AGE OF SUPERANN UATION, WHICHEVER IS LESS, IF THE EMPLOYEE AT THE TIME OF HIS DEATH HAD ATTAINED THE AGE OF THIRTY FIVE YEARS BUT HAD NOT ATTAINED THE AGE OF FORTY EIGHT YEARS; DURING THE IMPUGNED ASSESSMENT YEAR THE ASSESSEE C REATED THE PROVISION ON ACCOUNT OF FINANCIAL ASSISTANCE TO BE PROVIDED TO FOUR EMPL OYEE AS PER THE DETAIL OF THE VOUCHER AS FOLLOWS: DETAIL OF FINANCIAL ASSISTANCE NAME OF THE EMPLOYEE LIABILITY SMT. HEMA CHETAL 14,66,289/- SMT. MALKEET KAUR 4,63,739/- SMT. ASHA SANDAL 12,90,234/- SMT. ANITA TYAGI 7,01,698/- TOTAL 39,21,960/- 18. WE FIND THAT BESIDES THE ABOVE TWO DOCUMENTS, N O OTHER EVIDENCE HAS BEEN FILED EITHER BEFORE THE LOWER AUTHORITIES OR BEFORE US. WHAT EMERGES THEREFORE FROM THE ABOVE DOCUMENTS IS THAT THE ASSESSEE WAS LIABLE TO PROVIDE FINANCIAL ASSISTANCE TO THE FAMILY OF DECEASED EMPLOYEES, THE CALCULATION OF TH E QUANTUM BEING ALSO SPECIFIED IN THE NOTIFICATION. SO FAR THERE IS NO DISPUTE. BUT W E FIND THAT THE LD. AR HAS NOT BEEN ABLE TO DEMONSTRATE BEFORE US WITH THE HELP OF EVIDENCE THAT SUCH LIABILITY AROSE DURING THE YEAR AMOUNTING TO RS. 39,21,960/-. IT HAS NOT BEEN SHOWN AS TO WHY LIABILITY ON ACCOUNT OF AFORESAID FOUR PERSONS WAS CREATED DURING THE YE AR. IF THE PERSONS WERE DECEASED EMPLOYEES, NO EVIDENCE TO THAT EFFECT WAS BROUGHT O N RECORD. FURTHER NO BASIS OF THE 7 CALCULATION OF THE FINANCIAL ASSISTANCE PROVIDED TO THE FOUR EMPLOYEES WAS BROUGHT ON RECORD. DURING THE COURSE OF HEARING BEFORE US, A S PECIFIC QUERY WAS RAISED BY THE BENCH REGARDING THE ALLOWABILITY OF THE CLAIM OF TH E IMPUGNED PROVISION AND THE BASIS OF THE SAME IN RESPONSE TO WHICH THE LD. AR REFERRE D TO THE NOTIFICATION REPRODUCED ABOVE AND THE VOUCHER PLACE AT PAPER BOOK PAGE NO. 21-24 AND 14 RESPECTIVELY DETAILING THE EMPLOYEES ON ACCOUNT OF WHOM THE PROV ISION WAS CREATED. THIS, WE FIND, DOES NOT ESTABLISH THAT THE IMPUGNED PROVISION OF E XPENSE HAD ACCRUED DURING THE YEAR AND PERTAINED TO THE YEAR UNDER APPEAL. SINCE THE BASIC INGREDIENT FOR ALLOWABILITY OF AN EXPENSE / CLAIM, HAS NOT BEEN SATISFIED BY TH E ASSESSEE, THE ONUS FOR WHICH UNDOUBTEDLY LIES ON THE ASSESSEE, WE HOLD THAT THE PROVISION CREATED FOR FINANCIAL ASSISTANCE AMOUNTING TO RS. 39,21,960/- IS NOT ALLO WABLE. WE THEREFORE CONCUR WITH THE FINDINGS OF THE LD. CIT(A) AND DISMISS THIS GROUND OF APPEAL OF THE ASSESSEE. 19. THE APPEAL OF THE ASSESSEE IS THEREFORE DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (BHAVNESH SAINI) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED :24/06/2016 AG COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT, TH E CIT(A), THE DR