Ad-hoc provision for transit breakage is contingent liability & not required to be recognised as per AS- 29 of ICAI

Brief of the Case Delhi High Court held In the case of Seagram Distilleries Pvt. Ltd. vs. CIT that in the current case there is no reasonable scientific method adopted by the Assessee to estimate the transit breakages to justify such provision. The provision would, in the circumstances, be a provision for a contingent liability and, therefore, in terms of the AS- 29 ought not be recognised. The actual transit breakages as and when they occur are allowable as revenue expenditure in the accounting year in which such breakages occur.  Facts of the Case The Seagram Distilleries Private Limited wa...