Back
IN THE HIGH COURT OF DELHI AT NEW DELHI
Rajiv Shakdher, Girish Kathpalia, JJ.
The Pr. Commissioner of Income Tax -6 – Appellant
Versus
Nokia Solution & Networks India P. Ltd. – Respondent
ITA 823 of 2018
Decided On : 28-07-2023
Provision for Liquidated Damages - Income Tax - The court set aside the impugned order and remanded the matter to the Tribunal for reconsideration based on the observations and directions contained in a similar case. The parties were directed to appear before the Tribunal on a specified date.
Fact of the Case:
The appeal concerned the Assessment Year 2007-08, where the appellant/revenue sought to challenge the order passed by the Income Tax Appellate Tribunal regarding the deletion of a provision for liquidated damages claimed in the profit and loss account by the Assessee.
Finding of the Court:
The court set aside the impugned order and remanded the matter to the Tribunal based on the observations and directions contained in a similar case. The parties were directed to appear before the Tribunal on a specified date.
Issues: The issues included the admissibility of provision for liquidated damages under the Income Tax Act, the consideration of unascertained liabilities, and the applicability of the principle of res judicata in income tax proceedings.
Ratio Decidendi: The court's decision was influenced by the fact that the issue had arisen for consideration in a similar case, where the court had passed an order remanding the matter for reconsideration by the Tribunal. The court applied the same observations and directions to the present appeal.
Final Decision: The impugned order dated 31.01.2018 was set aside, and the matter was remanded to the Tribunal. The parties were directed to appear before the Tribunal on 28.08.2023.
JUDGMENT
[Physical Hearing/Hybrid Hearing (as per request)]
Rajiv Shakdher, J. (Oral):
1. This appeal concerns Assessment Year (AY) 2007-08.
2. Via this appeal, the appellant/revenue seeks to assail the order dated 31.01.2018 passed by the Income Tax Appellate Tribunal [in short, "Tribunal"].
3. The questions of law, as proposed by the appellant/revenue, read as follows:
2.1. Whether on the facts and circumstances of the case ld. ITAT/CIT(A) erred m deleting of Rs.3,24,11,982/- made by Assessing officer on account of provision for liquidated damages claimed in the profit and loss account by the Assessee even when the provisions are unascertained liabilities, hence were not admissible under the provision of Income Tax Act,1961?
2.2. Whether on the facts and circumstances of the case ld. ITAT/CIT(A) erred m deleting of Rs.3,24,11,982/- made by Assessing officer on account of provision for liquidated damages claimed in the profit and loss account by the Assessee by not considering the fact that the assessee was following the mercantile systems of accounting and the law does riot allow the claim of unascertained liabilities?
2.3. Whether on the facts and circumstances of the case ld. ITAT/CIT(A) is legally in dismissing the appeal of the Revenue on the basis of earlier order in the assessee's own case despite the fact that principle of res,judicata is not applicable to income tax proceedings as each assessment year is a separate proceeding year?
4. The issue which arises for consideration in the present appeal preferred by the appellant/revenue, also arose for consideration in ITA No. 761/2018, which was on our board today.
5. In ITA no.761/2018, we have passed an order today remanding the matter for reconsideration by the Tribunal.
6. The observations and directions contained therein will apply mutatis mutandis to this matter as well.
7. Accordingly, the impugned order dated 31.01.2018 is set aside.
7.1. The matter is remanded to the Tribunal.
7.2. Parties will appear before the Tribunal on 28.08.2023.
8. The appeal is disposed of, in the aforesaid terms.
The main legal point established in the judgment is the application of consistent observations and directions from a similar case to the present appeal, leading to the setting aside of the impugned o....
The main legal point established in the judgment is the requirement for a definite finding on whether a provision represents an ascertained liability under the Income Tax Act, 1961.
The main legal point established in the judgment is that when an issue is covered by a judgment rendered by a coordinate bench of the court and affirmed by the Supreme Court, no substantial question ....
The court emphasized the importance of addressing the misalignment in orders and the need for the Tribunal to consider the order on merits concerning the relevant assessment year.
Under the mercantile system of accounting, the provision for liability under specific heads may be considered as admissible expenditure.
The legal provisions concerning additions made by the assessing officer vis-a-vis payment received for rendering satellite transponder facilities were central to the Court's decision.
The effect of reopening the assessment is to vacate or set aside the initial order of assessment and substitute in its place the order made in reassessment proceedings. The original assessment order ....
The court emphasized that for exercise of powers under Section 263 of the Income Tax Act, not only the order passed by the Assessing Officer would have to be categorized as erroneous, but it also has....
The court's decision was influenced by the decision of a previous court order and the pending appeal in the Supreme Court.
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
