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This query is : Resolved

Pratik Nitin Vyas (Querist)

27 October 2009 1)The AO While Passing The order u/s.143(3)r.w.s.147 of the act held that the assessee was entitled to indexation.

So The Query Is what is the meaning of r.w.s.
in this abovementioned statemnts.

2)What Do U Mean by foreseeable losses as per as (ACcounting Statndard) 7 ?

HARI K V

HARI K V (Expert)

27 October 2009 1. Read with Section

2. The foreseeable loss determined in respect of incomplete contract as
per the Accounting Standard â€“ 7 is an allowable expenditure
Recently, the Mumbai Income-tax Appellate Tribunal (the Tribunal) in
the case of Jacobs Engineering India Pvt.Ltd.1 allowed the foreseeable
loss determined in respect of incomplete contract as per Accounting
Standard (AS) â€“ 7 issued by the Institute of Chartered Accountants of
India (ICAI).
Facts of the case
ï‚· The taxpayer was a company engaged in the business of consulting
engineers in the field of chemicals, petrochemicals, fertilisers,
cement, etc.
ï‚· The taxpayer was following a percentage completion method as
prescribed under AS-7 issued by ICAI for the purpose of accounting
of revenues and expenditure. The taxpayer charged foreseeable loss
in respect of an incomplete contract in accordance with AS-7.
ï‚· The Assessing Officer (AO) disallowed the provision made by the
taxpayer in respect of foreseeable loss on the basis that the provision
does not represent actual loss and the taxpayer was entitled for the
actual liability and not for the future expected liability. The AO
relied on the decision of Supreme Court in the case of Tuticorin
Alkali Chemicals & Fertilizers Ltd.2 to hold its contention.
ï‚· The Commissioner of Income-tax (Appeals) validated the order of
AO and held that the anticipated losses can not be allowed while
computing the tax payable.

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