The Pr.commissioner Of Income-Tax-3,Ahmedabad v. Rasna Private Limited

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL No. 21 of 2016 ============================================================= THE PR.COMMISSIONER OF INCOME-TAX-3,AHMEDABADVersusRASNA PRIVATE LIMITED ============================================================= Appearance :MRS MAUNA M BHATT, Advocate for the PETITIONER(s) No. 1MR B S SOPARKAR, Advocate for the RESPONDENT(s) No. 1 ============================================================= CORAM: HONOURABLE Mr. JUSTICE AKIL KURESHIandHONOURABLE Mr. JUSTICE B.N. KARIA21[st] August 2018 ORAL ORDER(PER : HONOURABLE Mr. JUSTICE AKIL KURESHI) Revenue has filed this appeal challenging the judgment of the Income Tax Appellate Tribunal, Ahmedabad [“Tribunal” for short] dated 12[th] June 2015. Following substantial question of law was framed at the time of admission of the Appeal. “Whether, on the facts and in the circumstances of the the Income case,Tax Appellate Tribunal was justified in upholding the deletion of addition of Rs. 1,07,38,769/= made by the Assessing Officer on account of disallowance of provision for damaged goods ?” We notice that concerning this very assessee, Division Bench of this Court in the judgment dated 7[th] July 2016 in Tax Appeal No. 1298 of 2008 and connected appeals has answered the question in favour of the assessee, making the following observations :- “6.Heard learned advocates for both the sides. Mainly two issues have arisen from the present set of appeals; namely, (i) disallowance of the provision made for the current years under appeal and (ii) disallowance of actual liability pertaining to earlier years. So far as the issue with regard to deletion of addition by the CIT (A) being the provisions made for damaged goods for the current year and earlier years, the Tribunal has proceeded on the basis of the assessees own case in the previous years. The Tribunal has considered the fact that the issue is squarely covered by the decision of the Tribunal in assessees own case for previous years, the facts being exactly identical in the case on hand also. 7.It is required to be noted that there is a change in the method of accounting employed during the years under review from that of employed in the immediately preceding year. We have also considered the Government Notification No. 9949 dated 25.01.1996 whereby certain accounting standards for assessees following mercantile system of account have been made compulsory from A.Y. 1997-98 and find that the case of the assessee is covered by the same. The decisions cited by learned advocate for the assessee also applies on the facts and circumstances of the present case. 8.The Apex Court in the case of Rotork Controls India (P.) Ltd (supra)observed that a provision is a liability which can be measured only by using a substantial degree of estimation and that a provision is recognized when (a) an enterprise has a present obligation as a result of a past event; (b) it is probable that an outflow of resources will be required to settle the obligation and (c ) reliable estimate can be made of the amount of the obligation. The Apex Court observed that if these conditions are not met, no provision can be recognized. Therefore, we are of the view that the CIT(A) and the Tribunal have rightly disallowed the addition made by the Assessing Officer. We do not find any error in the same. 9. In view of the above, the questions raised in the present appeals are answered in favour of the assessee and against the revenue. The orders passed by the Tribunal are confirmed. No costs.” In the result, question is answered against the Revenue and in favour of the assessee. Tax Appeal is dismissed. [Akil Kureshi, J.] Prakash [B.N Karia, J.]