Assessee, a corporate entity engaged in dredging and marine engineering services, claimed a provision for expected contract losses based on AS-7.Assessing Officer termed provision as contingent liability and accordingly, disallowed same.CIT(A) affirmed the order of the AO. On appeal the Tribunal held that  although actual billed revenue was less, assessee, following Percentage of Completion Method (POCM), recognized additional revenue and applied same method for costs.  Further, as per AS-7, probable losses from contracts must be recognized immediately, and assessee complied by estimating losses and recognizing a portion as actual loss, with remainder as a provision for losses and provision was reversed in subsequent years based on updated estimates. On  it could be said that provision constituted an ascertained liability/probable loss for assessee and was made on a scientific basis. Therefore  provision would be an allowable deduction and question of adding same to Book-Profit would not arise. (AY. 2016-17