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पी.एम. जगताप, लेखा सद य These two appeals filed by the assessee against two separate orders passed by the ld. CIT(A)- 12, Mumbai dtd. 26-11-2010 and 14-06-2011 for assessment years 2007-08 and 2008-09 respectively involve a common issue and the same therefore have been heard together and are being disposed of by this single consolidated order for the sake of convenience.

2. The solitary issue involved in the appeal of the assessee for A.Y. 2007- 08 relates to the addition of Rs. 25,27,070/- made by the A.O. and confirmed 2 ITA 1032/M/11 & 6429/M/11 by the ld. CIT(A) on account of disallowance of provisions made by the assessee treating the same as contingent liability.

7. In ground No. 1 of assessee's appeal for A.Y. 2008-09, the assessee company has disputed the addition of Rs. 88,48,081/- made by the A.O. and confirmed by the ld. CIT(A) on account of disallowance of provisions made by the assessee treating the same as contingent liability.

6 ITA 1032/M/11 & 6429/M/11

8. In its P&L account filed along with the return of income for A.Y. 2008- 09, a sum of Rs. 88,48,081/- was debited by the assessee on account of provisions made for professional fees payable to People plus HR Consultants P. Ltd. According to the A.O., this provision made by the assessee was not for the liability towards expenses actually incurred during the year under consideration. Keeping in view the same and also having regard to the fact that certain provisions had been subsequently reversed by the assessee, he treated the provision of Rs. 88,48,041/- made by the assessee as un- ascertained contingent liability and the same was disallowed by him. The disallowance of Rs. 88,48,041/- made by the A.O. on account of provisions made was disputed by the assessee in an appeal filed before the ld. CIT(A) and after considering the submissions made on behalf of the assessee and the material available on record, the ld. CIT(A) upheld the order of the A.O. treating the provisions made by the assessee as unascertained/contingent liability for the following reasons given in para 6 of his impugned order:-

"6. I have carefully considered the order of the assessing officer and the submission of the appellant. I find that as far as Rs. 4,48,041/- is concerned, there seems to be no doubt that the amount stands reversed and is to be considered as the income of the appellant in the concerned year. Regarding the balance i.e. said to be due to United Utilities, it is seen that the appellant does have an Agreement dated 17/10/2002 with the said party for getting/obtaining technical support and technology transfer. The Agreement it is seen is a detailed Agreement which talks about the services that have to be provided by United Utilities to the appellant. However, regarding the compensation and the payment1 it is seen that the appellant is supposed to be paying the amount to United Utilities on the completion of various milestones. For this, the said concern will raise invoices and submit the same to the appellant. As per the Agreement, the payment has to be made within seven working days of the receipt of the invoice by the appellant. It has been stated in the Agreement that total compensation that shall be paid by the appellant to the said concern shall in no event exceed Rs. 42 Million and is inclusive of service-tax etc., if applicable. Regarding the fee for secondment of personals, it has been stated in the Agreement that the United Utilities shah raise invoices for each month to the appellant which the appellant shall pay. The amount that is to be paid to the operation director, technical person one and technical person two has also been provided as has been the rates for part-time 7 ITA 1032/M/11 & 6429/M/11 assigned staff. However, it is very clear from the Agreement that the payments have to be done only after the raising of invoices which indicates that the liability becomes ascertained only when invoices are raised by the said concern. I find that regarding Rs. 84 Lacs treated as provision to be paid to United Utilities, the appellant has not been able to produce any invoice that has been raised by the said concern for the services rendered. The full volume of services rendered along with the hours of manpower used is the very basis of raising the invoice on which the quantified payment has to be made as stated in the Agreement. Therefore, any amount set aside to payment without the support of the invoice can only be termed as a contingent liability and not as a ascertained liability even though there is an Agreement, which indicates that certain payments have to be made. In the case of the appellant, I find that the appellant has made a provision basing it on an Agreement that has been signed with United Utilities in spite of the fact that at the point of time of making of the provision the appellant did not have any primary documents like invoices to indicate the actual amount of payment that had to be made. At best, this provision made by the appellant was estimated one and can only be called contingent in nature."

9. For the reasons given above and relying on the order of his predecessor in assessee's own case for A.Y. 2007-08 on a similar issue, the ld. CIT(A) confirmed the disallowance of Rs. 88,48,041/- made by the A.O. on account of provisions made by the assessee treating the same as unascertained or contingent liability.

10. We have heard the arguments of both the sides and also perused the relevant material available on record. It is observed that while confirming the disallowance made by the A.O. on account of provisions made by the assessee in the year under consideration i.e A.Y. 2008-09 vide his impugned order, the ld. CIT(A) has relied on the decision of his predecessor passed in assessee's own case on the similar issue for A.Y. 2007-08. The said appellate order of the ld. CIT(A) passed for A.Y. 2007-08 has already been upheld by us while disposing of the appeal of the assessee for A.Y. 2007-08. Moreover, as held by the ld. CIT(A) in his impugned order, the amount for the services rendered was payable by the assessee as per the relevant agreement only after raising the invoices by the other party. According to the ld. CIT(A), the liability for the 8 ITA 1032/M/11 & 6429/M/11 said amount thus could be said to be ascertained only when the invoices were raised by the said party and since the assessee was not able to produce any such invoices raised by the said party during the year under consideration for the services rendered, the ld. CIT(A) held that the liability was unascertained or contingent. Keeping in view these reasons given by the ld. CIT(A) as well as the conclusion drawn by us on the similar issue while disposing of the appeal of the assessee for A.Y. 2007-08, we uphold the impugned order of the ld. CIT(A) confirming the disallowance of Rs. 88,48,081/- made by the A.O. on account of provisions made by the assessee treating the same as unascertained or contingent liability. Ground No. 1 of assessee's appeal for A.Y. 2008-09 is accordingly dismissed.