Foster Wheeler (G.B.) Ltd. Vs DCIT (ITAT Chennai)
ITAT Chennai: Reversal of Disallowed Provision Not Taxable — Assessee. Gets Relief on Double Taxation Under VSV Settlement
Assessee, a UK-based company with a project office in India, rendered engineering & project management services to IOCL Paradip Refinery & Reliance Industries Ltd. projects. It had created provisions for liquidated damages aggregating ₹59.50 crore in A.Ys. 2010–11 to 2013–14, part of which (₹38.26 crore) was disallowed by the Revenue in earlier assessments. In A.Y. 2018–19, upon reversal of the entire provision, the Assessee credited ₹59.50 crore to P&L & offered it to tax. Later, having settled the earlier disallowed portion under the Vivad Se Vishwas (VSV) Scheme, 2024, it sought exclusion of ₹38.26 crore from taxable income to prevent double taxation.
CIT(A) dismissed the plea as premature since the earlier years’ appeals were pending then. However, the Tribunal noted that the disallowances had since attained finality under the VSV Scheme. As the portion of ₹38.26 crore had never been allowed as deduction earlier, its reversal could not be taxed again u/s 41(1). The ITAT further held that such a legitimate claim could be raised even for the first time before appellate authorities, relying on NTPC v. CIT (229 ITR 383 SC) & CIT v. Perlo Telecommunication (Mad HC).
