Case Law Details
ACIT Vs Green Environment Services Co-op Society Ltd. (ITAT Ahmedabad)
ITAT Ahmedabad held that provision for Solid Waste Disposal Expenses made by the assessee is not a contingent liability but is an accrued liability and therefore claim of assessee is allowable.
Facts- AO noted that the assessee had claimed an amount of Rs.7,77,73,600/- as provision for expenses of solid waste disposal.
Since, as per the AO, the assessee did not submit any documentary evidence clarifying whether the amount for which provision was made was based on actual incurrence of expenses and inquiry revealed that expenses actually incurred in subsequent years i.e. financial years 20 15-16, 20 16-17 & 20 17-18 fell short of the amount provided for, the AO held that the provision related only to a contingent liability and disallowed the same. He held that only actual liability could be allowed to be considered as expenditure.
Conclusion- We find that the ld.CIT(A) has held the provision created by the assessee to be allowable as an accrued liability taking note of the fact that income in relation to the solid waste disposal under taken by the assessee was already accounted for in the impugned year, and since the assessee could not carry out the disposal of solid waste on account of non-availability of proper site and had kept the waste at temporary site, it had booked the expenses for the disposal of the waste at the permanent site ,commensurate to income accounted for by it ,on the basis of the actual estimation of expenditure which were required to be incurred.
Please become a Premium member. If you are already a Premium member, login here to access the full content.