ITO, Ward-6(2), Kolkata, Kolkata V. M/s Global Vision Securities Pvt. LTD, Kolkata

ITA 1683/KOL/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6321 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 9 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-06-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 23-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MANOJ KATARUKA
• Keywords: Business expenditure
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : KOLKATA [BEFORE HONBLE SHRI J.SUDHAKAR REDDY, AM & HONB LE SMT. MADHUMITA ROY, JM ] I.T.A NO. 1683/KOL/20 16 ASSESSMENT YEAR : 2008-0 9 ITO, WARD-6(2), KOLKATA -VS- M/S GLOB AL VISION SECURITIES P LTD. [PAN: AAACG 9631 L ] (APPELLANT) (RESPON DENT) FOR THE DEPARTMENT : SHRI SALLONG YADEN, ADDL . CIT FOR THE APPELLANT : SHRI MANOJ KATARUKA, ADV OCATE DATE OF HEARING : 30.05.2018 DATE OF PRONOUNCEMENT : 01.06.2018 ORDER PER J.SUDHAKAR REDDY, AM THIS APPEAL BY THE REVENUE DIRECTED AGAINST THE OR DER OF THE COMMISSION OF INCOME TAX(APPEALS)-20, KOLKATA PASSED U/S 143(3) OF THE INCOME TAX ACT, 1961(THE ACT) FOR THE ASSESSMENT YEAR 2008-09. 2. THE ASSESSEE IS A COMPANY AND IS IN THE BUSINESS OF SHARE TRADING. THE BRIEF FACTS RELATING TO THE ISSUE BEFORE US ARE BROUGHT OUT PAG E 3 PARA 3 OF THE LD. CIT(A) HELD AS UNDER: BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE M/S GLOBAL VISION SECURITIES PVT LTD IS A PRIVATE LIMITED COMPANY AND IS A MEMBER OF NSE & EN GAGED IN THE BUSINESS OF 'DEALING IN SHARES & SECURITIES' HAVING ITS REGD. O FFICE SITUATED AT 18, RABINDRA SARANI, GATE NO.3, 5TH FLOOR, ROOM NO 2, KOLKATA-70 000 1. THE ASSESSEE COMPANY HAD FILED ITS RETURN OF THE INCOME U/S 139(1) ON 30-09- 2008 FOR THE AY 2008-09, SHOWING A 2 ITA NO.1683/KOL/2016 M/S GLOBAL VISION SECURITIES PV T. LTD. A.YR .2008-09 2 TOTAL LOSS OF RS.21309743/-. DURING THE COURSE OF T HE ASSESSMENT PROCEEDINGS, THE AO HAS DISALLOWED A SUM OF RS.21660640/- BY TREATING T HE SAME AS BUSINESS LOSS RELATING TO EARLIER FY 2000-01. THE ASSESSEE COMPANY HAD CLAIME D BUSINESS LOSS OF RS.21660640/- IN COMPUTATION OF INCOME FOR THE AY 2008- 09. IN MA Y 2000 OUTSTANDING POSITION/OUTSTANDING DELIVERY OF THE ASSESSEE COMPA NY AS PER DELIVERY RECEIPT STATEMENT WAS CLOSED OUT BY NSE/NSCCL BY WRONGFULLY SELLING T HE SHARES EVEN BEFORE THE PAY IN DATE. THE ACT OF NSE/NSCCL WAS NOT AT ALL JUSTIFIED SO THE ASSESSEE COMPANY DISPUTED THE DEMANDS RAISED BY NSE/NSCCL AND FILED A WRIT PE TITION IN HORI'BLE KOLKATA HIGH COURT. SINCE THE COMPANY DID NOT ACCEPT AND ACKNOWL EDGE THE DEMANDS OF NSE/NSCCL AND WAS DISPUTING THEM BY WAY OF FILING WRIT PETITI ON IN HONBLE KO1KATA HIGH COURT, THE SAME WAS DISCLOSED AS A CONTINGENT LIABILITY IN NOTES ON ACCOUNTS. ULTIMATELY IN SEPT, 2007 THE MATTER FINALLY SETTLED WITH NSE/NSCC L. THE WRIT PETITION FILED BY THE ASSESSEE COMPANY WAS WITHDRAWN ON 20-09-2007. THE A BOVE SEQUENCE OF EVENTS CLEARLY DEMONSTRATED THAT THE COMPANY NEVER ACCEPTED THE DE MANDS OF NSE/NSCCL AND WAS DISPUTING THEM ALL ALONG. IT IS ONLY FY 2007-08 THA T THE COMPANY CAME TO SETTLE THE SAME WITH NSE/NSCCL AND PAID THE SAME AFTER WITHDRA WING THE WRIT PETITION. THE ASSESSEE COMPANY FURTHER SUBMITTED THAT IN MAY 2000 OUTSTANDING DELIVERIES OF THE SHARES PURCHASED BY THE COMPANY AS PER 'DELIVERY RE CEIPT STATEMENT' WERE WRONGFULLY SOLD BY NSE/NSCCL EVEN BEFORE THE PAY IN DATE. THE ASSESSEE COMPANY DISPUTED THE DEMAND OF NSE/NSCCL AND FILED A WRIT PETITION IN HO N'BLE KOLKATA HIGH COURT AND THE HON'BLE KOLKATA HIGH COURT HAD PASSED AN INJUNCTION ORDER ON SUCH DEMAND OF NSE/NSCCL. HENCE THERE WAS NO DEMAND IN THE EYE OF LAW AS PER THE DECISION OF HONBLE KOLKATA HIGH COURT. THE ASSESSEE COMPANY FU RTHER SUBMITTED THAT THE HON'BLE KOLKATA HIGH COURT ORDERED THE ASSESSEE COMPANY TO RENEW ONLY EXISTING BANK GUARANTEES WHICH WERE GIVEN TO NSE/NSCCL EARLIER FO R OPERATIONS. BUT THE AO HAD DISALLOWED THE BUSINESS LOSS OF RS. 21660640 / - ON THE GROUND OF PRIOR PERIOD EXPENSE. 3. THE LD. CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE BY HOLD AS FOLLOWS: I HAVE CONSIDERED THE FINDING OF THE AO IN THE ASS ESSMENT ORDER AND THE WRITTEN SUBMISSION AS WELL AS CASE LAWS BROUGHT ON RECORD B Y THE AR DURING THE APPELLATE PROCEEDINGS. I THINK THE RATIO DECIDED BY DIFFEREN T JUDICIAL AUTHORITIES IN THE CAES OF ALEMBIC CHEMICALS WORKS LTD (SUPRA), CIT VS. PHALTO N SUGAR WORKS LTD. (SUPRA) AND CIT VS. SOORAJMULL NAGARMULL (KOLKATA)(SUPRA), IT I S CLEAR FROM THE APEX COURT DECISION IN THE CASE OF INDIAN MOLASSES COM PVT. LT D. VS. CIT 37 ITR 66 (S C) AND SHREE SAJJAN MILLS LTD. VS. CIT 1985, 156 ITR 585 ( S C). IN THESE CASES THE HON'BLE SUPREME COURT HAS OBSERVED EXPENDITURE WHICH IS DEDUCTIBLE FOR INCOME TAX PUR POSES, IS ONE WHICH IS TOWARDS A LIABILITY ACTUALLY EXISTING AT THE TIME, BUT THE PUTTING ASIDE OF MONEY WHICH MAY BECOME EXPENDITURE ON THE HAPPENING OF AN EVENT IS NOT AN EXPENDITURE. 3 ITA NO.1683/KOL/2016 M/S GLOBAL VISION SECURITIES PV T. LTD. A.YR .2008-09 3 CONTINGENT LIABILITIES DO NOT CONSTITUTE EXPENDITU RE AND CANNOT BE THE SUBJECT-MATTER OF DEDUCTION EVEN UNDER THE MERCANTILE SYSTEM OF ACCOU NTING. EXPENDITURE WHICH WAS DEDUCTIBLE FOR INCOME TAX PURPOSES IS TOWARDS A LIABILITY ACTU ALLY EXISTING AT THE TIME BUT SETTING APART MONEY WHICH MIGHT BECOME EXPENDITURE ON THE HAPPENI NG OF AN EVENT IS NOT EXPENDITURE. A DISTINCTION IS OFTEN MADE BETWEEN AN ACTUAL LIAB ILITY IN PRESENT AND A LIABILITY DE FUTURE WHICH FOR THE TIME BEING IS ONLY CONTINGENT. THE FO RMER IS DEDUCTIBLE BUT NOT THE LATTER. AFTER GOING THROUGH THE FACTS OF THE CASE AND THE R ATIO DECIDED BY THE APEX COURT IS SHREE SAJJAN MILLS PVT. LTD. CASE AND INDIAN MOLASS ES COMPANY PVT. LTD. (SUPRA). I THINK IT IS VERY CLEAR THAT THE LIABILITY OF EXPEND ITURE IS TO BE CONSIDERED IN THE YEAR IN WHICH IT IS FINALLY SETTLED FOR EXPENDITURE. ACCORD INGLY, ASSESSEES APPEAL ON GROUNDS NO. 1 TO 7 ARE ALLOWED. AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS. ON CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, PERUSAL OF PAPERS ON REC ORD AND ORDERS OF THE AUTHORITIES BELOW, CASE LAW CITED. WE HOLD AS FOLLOWS. 5. THE SEQUENCE OF FACTS ARE AS FOLLOWS: (I) THE APPELLANT WAS INCORPORATED IN JANUARY 1995 AND BECAME A TRADING MEMBER OF THE NATIONAL STOCK EXCHANGE IN 1995. THE APPELLANT HAD GIVEN BANK GUARANTEES OF APPROX RS.102.50 LACS ISSUED BY VARIOUS BANKS FAVOURING NS EIL/ NSCCL. (II) A SETTLEMENT PERIOD STARTS ON EVERY WEDNESDAY AND ENDS THE FOLLOWING TUESDAY. THE MAIN PURPOSE OF THE SETTLEMENT PERIOD IS TO GIVE AN OPPORTUNITY TO THE MEMBERS TO TRADE AND DO TRANSACTIONS WITHIN THE SAID PERIOD. PAYMENT IS TO BE MADE ON THE FOLLOWING TUESDAY. ON NON-PAYMENT ON TUESDAY, NSCCL IS ENTITL ED TO WITHHELD ALL SECURITIES DUE TO MEMBER AND THEREAFTER SELL OUT ALL SUCH SECURITI ES. IN THE CASE OF THE APPELLANT SETTLEMENT NO. 2000018 STARTED ON 26TH APRIL 2000 A ND CONTINUED TILL 02.05.2000. NSCCL ON 02.05.2000 ENQUIRED WITH THE APPELLANT REG ARDING INTENTION TO TAKE DELIVERY 4 ITA NO.1683/KOL/2016 M/S GLOBAL VISION SECURITIES PV T. LTD. A.YR .2008-09 4 OF THE SHARES, WHICH THE APPELLANT RESPONDED VIDE F AX DATED 02.05.2000. THEREAFTER ON 03.05.2000 SETTLEMENT NO. 2000019 STARTED AND CONTI NUED TILL 09.05.2000. (III) ON 4TH MAY 2000, A FINAL SETTLEMENT OBLIGATIO N WAS DOWNLOADED ON THE COMPUTER OF THE APPELLANT BY NSCCL. FROM THE SAID SETTLEMENT NO . 2000018 IT APPEARED THE APPELLANT WERE REQUIRED TO TAKE DELIVERY OF SECURIT IES MENTIONED THEREIN AGAINST PAYMENT BY 8TH MAY 2000. ALONG WITH SAID FINAL SETTLEMENT O BLIGATION REPORT, FINAL RECEIPT STATEMENTS WERE ALSO DOWNLOADED BY NSCCL. FROM THE SAID FINAL RECEIPT STATEMENTS APPELLANT CAME TO KNOW THAT THE SECURITIES TO BE DE LIVERED TO THE APPELLANT WOULD BE DELIVERED ON 10TH MAY, 2000, ONLY ON RECEIPT BY NSC CL FROM THE DELIVERING MEMBER ON 8TH MAY 2000. (IV) AFTER RECEIPT OF THE SAID STATEMENTS AND FINAL SETTLEMENT OBLIGATION FOR SETTLEMENT NO. 2000018 THE APPELLANT BONA-FIDE BELIEVED THAT P AYMENTS FOR DELIVERY OF SECURITIES WOULD HAVE TO BE MADE ON 8TH MAY 2000. HOWEVER, ON 04.05.2000 A 'DAILY OBLIGATION REPORT' WAS DOWNLOADED ON THE COMPUTER OF THE APPE LLANT. FROM THE SAID REPORT FOR THE FIRST TIME THE APPELLANT CAME TO KNOW THAT THE DELI VERIES DUE TO BE RECEIVED ON L O' MAY 2000 FOR WHICH THE PAY-IN WILL BE DUE ON 8TH MAY 20 00 HAD BEEN SQUARED UP / CLOSED OUT ON 3RD MAY 2000 ITSELF. (V) THE APPELLANT VIDE LETTER AND FAX BOTH DATED 4. 5.2000 INFORMED NSCCL THAT IT WAS NOT LIABLE TO PAY LOSSES ARISING OUT OF NSCCL'S LAP SES, NEGLIGENCE, IRRESPONSIBLE AND ILLEGAL AD AND NSCCL ALONE IS RESPONSIBLE FOR LOSSE S ARISING OUT OF THIS SQUARING UP AND ITS PENDING POSITION COULD NOT BE SQUARED UP ON 3RD MAY 2000. THE SAID SQUARING UP IS UNILATERAL, WRONGFUL, UNAUTHORIZED AND APPELLANT CA NNOT BE LIABLE FOR ACTS AND OMISSIONS OF NSCCL. 5 ITA NO.1683/KOL/2016 M/S GLOBAL VISION SECURITIES PV T. LTD. A.YR .2008-09 5 (VI) THE APPELLANT COMPANY RECEIVED A LETTER DATED 05.05.2000 FROM NSCCL ALONG WITH 'TRADES DONE REPORT' DATED MAY 05, 2000 FOR TRADES ON 3RD MAY 2000 GIVING DETAILS OF SAID CLOSE OUT BY NSCCL. NSCCL ALSO ASKED THE APPEL LANT COMPANY TO PAY THE OUTSTANDING DUES FAILING WHICH SUITABLE ACTION MIGH T BE INITIATED. (VII) THE ASSESSEE COMPANY DISPUTED THE DEMAND RAIS ED BY NSE/NSCCL AND FILED A WRIT PETITION IN CALCUTTA HIGH COURT WHEREIN THE HO N'BLE CALCUTTA HIGH COURT VIDE ORDER DATED 09.05.2000 STAYED THE COLLECTION OF DUE S OF NSE / NSCCL IN FOLLOWING TERMS:- 'LET THERE BE AN INTERIM ORDER IN TERMS OF PRAYER ( D) OF THE PETITION TILL TUESDAY NEXT WITH LIBERTY TO APPLY FOR EXTENSION'. PRAYER (D) OF THE WRIT PETITION READS AS FOLLOWS:- '(D) INJUNCTION RESTRAINING THE RESPONDENTS FROM GI VING ANY EFFECT AND /OR FURTHER EFFECT AND/OR ACTING PURSUANT TO THE IMPUGNED LE HE R DATED 05.05.2000 AND TRADES DONE REPORT DATED 05.05.2000' (VIII) THE EFFECT OF THIS RESTRAINT INJUNCTION ORDE R WAS AS IF THE DEMAND LETTER 5TH MAY, 2000 AND 'TRADES DONE REPORT' FOR MAY 03, 2000 NEVE R EXISTED AND WAS NULLITY AND AS SUCH THERE WAS NO DEMAND IN THE EYE OF LAW. THE STA Y ORDER WAS EXTENDED ON 16.05.2000. FINALLY THE STAY ORDER WAS AGAIN EXTEND ED ON 30.06.2000 TILL FURTHER ORDERS. ORDERS DATED 16TH MAY, 2000 AND 30TH JUNE, 2000 WER E PASSED IN THE PRESENCE OF ADVOCATES FOR NSE/NSCCL. THE INJUNCTION SPECIFICALL Y RESTRAINED NSE/NSCCL FROM MAKING ANY DEMAND IN TERMS OF THE LETTER DATED 5TH MAY 2000. THE ORDER OF INJUNCTION CONTINUED FOR SEVERAL YEARS. 6 ITA NO.1683/KOL/2016 M/S GLOBAL VISION SECURITIES PV T. LTD. A.YR .2008-09 6 (IX) HON'BLE HIGH COURT CALCUTTA IN ITS ORDER DATED 16TH MAY, 2000 ALSO OBSERVED 'THE PETITIONERS WILL ALSO RENEW THE EXISTING BANK GUARA NTEE AT LEAST ONE WEEK BEFORE THE EXPIRY'. THE HIGH COURT ORDERED THE APPELLANT COMPANY TO RE NEW ONLY EXISTING BANK GUARANTEES WHICH WERE GIVEN TO NSE/NSCCL EARLIER. T HESE BANK GUARANTEES WERE GIVEN AS SECURITY / MARGIN FOR TRADING MUCH BEFORE FILLIN G OF THE WRIT PETITION. THE INTERIM ORDER NEVER REQUIRED THE APPELLANT COMPANY TO SUBMI T ANY FRESH/NEW BANK GUARANTEES. (X) SINCE THE APPELLANT COMPANY DID NOT ACCEPT AND ACKNOWLEDGE THE DEMANDS OF NSE/NSCCL AND DISPUTED THEIR DEMAND BY FILING A WRI T PETITION IN CALCUTTA HIGH COURT, THE MATTER BEING SUB-JUDICE AND PENDING BEFORE CALC UTTA HIGH COURT, THE SAME WAS DISCLOSED AS A CONTINGENT LIABILITY IN THE NOTES ON ACCOUNTS FORMING PART OF AUDITED ACCOUNTS FOR THE YEAR ENDED 31 .03.2001 ONW ARDS AS FOLLOWS:- 'CLAIMS BY NSE/NSCCL AGAINST THE COMPANY NOT ACKNOW LEDGED AS DEBT RS. 1,85,95,287.94 SINCE THE SAME IS STAYED BY HON'BLE CALCUTTA HIGH COURT'. (XI) AFTER YEARS OF LITIGATION, THE APPELLANT COMPA NY AND NSE/NSCCL REALIZED THE LOSS OF TIME AND MONEY AND STARTED NEGOTIATIONS WHICH LE D TO AN AMICABLE SETTLEMENT OF THEIR DIFFERENCES. ULTIMATELY IN SEPTEMBER, 2007 THE MATT ER WAS FINALLY SETTLED WITH NSE/NSCCL. (XII) SINCE THE COMPANY DISPUTED THE CLAIM DUE TO W RONGFUL ACT OF NSE/NSCCL AND THE SAME WAS AMICABLY SETTLED AS A MATTER OF BUSINESS P RUDENCE IN FY 2007-08, THE APPELLANT COMPANY SUBMITS THAT THE LIABILITY HAVE C RYSTALLIZED ONLY IN FY 2007-08. (XIII) THE CLOSE OUT OR THE SALE OF THE PURCHASES M ADE BY THE APPELLANT WITHOUT ITS PERMISSION RESULTED IN SUCH HUGE LOSSES WHICH THE A PPELLANT HAD TO BEAR AS THERE WAS NO AUTHORIZATION FROM THE APPELLANT TO NSCCL TO DISPOS E THE SHARES AND THE ACTION OF 7 ITA NO.1683/KOL/2016 M/S GLOBAL VISION SECURITIES PV T. LTD. A.YR .2008-09 7 NSCCL IN DISPOSING THE SHARES WHICH RESULTED IN LOS S AND DEMANDING THE PAYMENT FROM THE APPELLANT WAS A DISPUTED ISSUE. (XIV) THE SETTLEMENT BENEFITTED BOTH THE APPELLANT AND NSCCL AS THE APPELLANT WAS ABLE TO RESUME TRADING IN NSEIL TERMINAL AND CARRY ON IT S DAY TO DAY BUSINESS ACTIVITY WHICH HAD BEEN SUSPENDED SINCE THE YEAR 2000 WHICH HAD HA MPERED THE BUSINESS OF THE APPELLANT. THE PAYMENT MADE TO THE NSCCL WAS ENTIRE LY LOSS INCURRED BY THE APPELLANT WHICH WAS DEBITED IN ITS BOOKS. (XV) NSE ISSUED DEMAND NOTICE FOR THE FIRST TIME ON 21-09-2007 REQUIRING THE APPELLANT COMPANY TO PAY RS. 1,52,48,599.69 TO NSCCL FOR THE PURPOSE OF RE- ENABLEMENT. NSE ALSO ADVISED THAT THE EXCHANGE WOULD INFORM THE APP ELLANT COMPANY OF FURTHER PAYMENTS / REQUIREMENT, IF ANY. (XVI) THE APPELLANT COMPANY PAID THE SUM OF RS. 1,5 2,48,599.69 BY WAY OF DEMAND DRAFT ON 24-09-2007 IN FAVOUR OF NSCCL. (XVII) THE APPELLANT COMPANY VIDE ITS LETTER DATED 15-10-2007 REFERRING TO PAYMENTS MADE TO NSCCL AS AFOREMENTIONED REQUESTED NSE TO PE RMIT RE- ENABLEMENT OF COMPANY'S TRADING FACILITIES. (XVIII) REFERRING TO APPELLANT COMPANY'S REQUEST LE TTER DT. 15-10-2007 FOR RE- ENABLEMENT, NSE RAISED FURTHER DEMAND OF RS. 64,15, 405.56 FOR THE FIRST TIME VIDE ITS LETTER DATED MARCH 5TH 2008. THE EXCHANGE ASKED THE APPELLANT COMPANY TO PAY THE SAME IN ORDER TO ENABLE EXCHANGE TO RESTORE APPELLA NT COMPANY'S TRADING FACILITY. (XIX) IN RESPONSE TO NSE'S FURTHER DEMAND OF RS. 64 ,15,405.56 RAISED VIDE NSE'S LETTER DATED 5TH MARCH, 2008 THE APPELLANT COMPANY PAID TH E SAME BY CHEQUES AND REQUESTED 8 ITA NO.1683/KOL/2016 M/S GLOBAL VISION SECURITIES PV T. LTD. A.YR .2008-09 8 NSE VIDE IT'S LETTER DATED 10-03-2008 TO RESTORE TR ADING FACILITY OF THE APPELLANT COMPANY. IN THE SETTLEMENT NO INTEREST WAS PAID ON THE DISPUTED DUES TO NSCCL COVERED UNDER THE WRIT PETITION. NSE ALSO WAIVED INTEREST F ROM 01.04.2002 ONWARDS. (XX) CONSEQUENT UPON SETTLEMENT OF DISPUTE / LITIGA TION THE WRIT PETITION WAS WITHDRAWN. THUS LIABILITY TO NSE/NSCCL WAS SETTLED, ASCERTAINE D AND PAID DURING THE YEAR. FROM THE ABOVE IT IS CLEAR THAT THE LIABILITY IN QU ESTION HAS CRYSTALLIZED DURING THE FINANCIAL YEAR 2007-08. PRIOR TO THIS, THE ASSESSEE HAD NEVER ACCEPTED THE DEMAND AND HAD APPROACHED THE HONBLE CALCUTTA HIGH COURT WHIC H HAD GRANTED INTERIM STAY. THE STAY WAS ENFORCED UNTIL THE ISSUE WAS SETTLED AND T HE WRIT PETITION WITHDRAW IN THE YEAR 2007. UNDER THE CIRCUMSTANCES, THE CASE LAW IN THE MATTER IS AS FOLLOWS: I) THE HIGH COURT OF GUJRAT IN THE CASE OF ALEMBIC CHE MICA WORKS LTD. VS. DEPUTY COMMISSIONER OF INCOME TAX [266 ITR 47(GUJ)] WHEREIN IT WAS HELD AS FOLLOWS: BUSINESS EXPENDITURE- YEAR OF ALLWOABILITY- DISPUTE D LIABILITY- ASSESSEE FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING- LIABILITY CAN BE S AID TO BE PROPERLY INCURRED WHEN THE DISPUTE BETWEEN THE PARTIES IS AMICABLY SETTLED OR FINALLY ADJUDICATED- LIABILITY PENDING ADJUDICATION BY WAY OF APPEAL IN THE HON'BLE SUPREM E COURT - TILL THE SAME IS FINALLY ADJUDICATED, IT WOULD REMAIN A CONTINGENT LIABILITY - SAME NOT ALLOWABLE AS DEDUCTION- SAME LOGIC APPLIES IN RELATION TO INTEREST PAYABLE ON TH E ARREARS OF UNPAID LIABILITY. II) THE HIGH COURT OF ALLAHABAD IN THE CASE OF COMMISSI ONER OF INCOME TAX VS. RAJ MOTORS[248 ITR 489 (ALL)] WHEREIN IT WAS H ELD AS FOLLOWS: BUSINESS EXPENDITURE- YEAR OF ALLWOABILITY- DISPUT ED CONTRACTUAL LIABILITY- POST- SCALE HIKE IN PRICE OF CAR-ASSESSEE A DEALER OF P F OR SALE OF MOTOR CARS AND SPARE PARTS- CONSEQUENT UPON HIKE OF SALE PRICE OF CARS B Y THE GOVERNMENT, P DEMANDING ADDITIONAL PRICE FROM ASSESSEE- AFTER INITIAL DISPU TE, SETTLEMENT ARRIVED AT ON 20 TH SEPT. 1981, FOR PAYMENT OF CERTAIN AMOUNT- PAYMENT MADE AND DEDUCTION CLAIMED IN ASSESSMENT YEAR 1982-83- NATURE OF THE LIABILITY WA S A CONTRACTUAL LIABILITY, WHICH WAS FINALLY SETTLED, VIDE AGREEMENT /LETTER DATED 2 0 TH SEPT., 1981-TRIBUNAL WAS THEREFORE JUSTIFIED IN ALLOWING THE SAME IN ASSESSM ENT YEAR 1982-83. 9 ITA NO.1683/KOL/2016 M/S GLOBAL VISION SECURITIES PV T. LTD. A.YR .2008-09 9 APPLYING THE PROPOSITION OF LAW LAID DOWN IN THE AB OVE JUDGMENTS OF THE FACTS OF THE CASE, WE UPHOLD THE ORDER OF THE LD. FIRST APPELLAT E AUTHORITY AND DISMISS THE APPEAL OF THE REVENUE . 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE COURT ON 01.06.2018 SD/- SD/- [MADHUMITA ROY] [ J.SUDHAKAR R EDDY] JUDICIAL MEMBER ACCOUNTANT MEMB ER DATED : 01.06.2018 SB, SR. PS COPY OF THE ORDER FORWARDED TO: 1. ITO, WARD-6(2), KOLKATA, P-7, CHOWRINGHEE SQUARE , 6 TH FLOOR, KOLKATA-700069 2. M/S GLOBAL VISION SECURITIES PVT. LTD., 18, RABI NDRA SARANI, GATE NO.3, 5 TH FLOOR, ROOM NO. 2, KOLKATA-700001. 3..C.I.T.(A)- , KOLKATA 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVAT E SECRETARY HEAD OF OFFICE/D.D.O., ITAT, KOLKATA BENCHE S