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1 - 2 of 2 (0.28 seconds)Sri Ramesh Harish , Bangalore vs Income Tax Officer Ward-2(1), ... on 11 October, 2017
22. The AO further observed that liability to pay reimbursement of
medical expenses arises in future on incurring of medical expenses by
ITA Nos.585, 558 & 559/Bang/2013
Page 14 of 20
employees and putting forth their claim for reimbursement of the said
expenses and such claim has to be in accordance with the scheme devised
by the assessee company. Thus the liability to pay the reimbursement of
medical expenses is a contingent liability and not liability in praesenti. The
AO further held that it is settled principle of law that contingent liability
cannot be allowed as an expenditure u/s. 37 of the Act and placed reliance
upon the judgment of the Hon'ble Supreme Court in the case of Indian
Molasses Co. (P) Ltd. v. CIT, 37 ITR 66 (SC) and the judgment of the
Hon'ble Bombay High Court in the case of CIT v. Kesar Sugar Works Ltd.,
239 ITR 398. The AO accordingly disallowed the provision of Rs.30,01,400
made towards medical liability for future claim and added to the total
income of the assessee.
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