Assessee, a foreign company, had entered into a contract with IOCL for rendering engineering design and project management services for the IOCL Paradip Refinery Project. Assessee had set up a project office in India and admitted the same as a Permanent Establishment (PE) in India. Assessee had debited provision for liquidated damages in earlier assessment years 2011-12 to 2013-14. The same was allowed as deduction by the Assessing Officer to the extent of Rs. 21.24 crores, and the remaining provision aggregating to Rs. 38.26 crores was disallowed.  Later on, there was a settlement reached with IOCL, and the assessee was able to realise liquidated damages of Rs. 59.50 crores. Consequently, the same was reported under the head ‘Other Income’ by way of ‘Provision no longer required written back’ in the relevant assessment year 2018-19. Assessing Officer rejected the plea of assessee for exclusion of reversal of liquidated damages on the ground that assessee was contesting disallowance in appeal in those earlier years, and the same had not yet attained finality. Tribunal held that since the disallowance made in earlier years had attained finality as dispute had been settled under VSV Scheme, 2024 and requisite Form 4 had also been issued by Competent Authority, reversal of provision for liquidated damages which was not allowed as deduction in earlier assessment years, could not be taxed in relevant assessment year 2018-19 in terms of section 41(1) of the Act. (AY. 2018-19)