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Income Tax Appellate Tribunal, DELHI ‘H’ BENCH,
Before: SHRI N.K. BILLAIYA, & SHRI ANUBHAV SHARMA
PER N.K. BILLAIYA, ACCOUNTANT MEMBER:-
This appeal by the assessee is preferred against the order of the ld. CIT(A) – 9, New Delhi dated 20.06.2019 pertaining to Assessment Year 2016-17.
The assessee has raised the following grounds of appeal:
“1. That the order of the Ld. Assessing Officer is contrary to law and the facts of the case. and is required to be quashed;
2. That the learned CIT (Appeals) has erred in law and on facts in sustaining a disallowance of a sum of Rs. 3471/-[maximum to exempt income] under section 14A of the Act, whereas, as per the revised working furnished by the assessee - appellant relying on latest judicial pronouncements of jurisdictional high court, the disallowance should have been Rs. 392/- and thus, the disallowance so sustained is unjustified and untenable in law and thus, should be deleted, as such.
2.1 That in doing so, the learned CIT (Appeals) has failed to appreciate the basic fact that the disallowance so made is without pointing out any deficiency or discrepancy in the explanation! claim of the assessee - appellant, more over the learned CIT (Appeals) has failed to appreciate the fact that learned AO has failed in recording any objective/ cogent satisfaction while working out the said disallowance under section 14 A of the Act and as such, the disallowance so made should be deleted.
2.2 That further, the said disallowance so sustained by learned CIT(Appeals) is against various judicial pronouncements of Hon'ble High Court of Delhi (i.e. jurisdictional high court), and as such, disallowance so sustained is misconceived and misplaced in law and should be deleted, as such. 1. 2. 3.
That the learned CIT (Appeals) has grossly erred in law and on facts by sustaining the disallowance of a sum of Rs. 14091711/- towards leave encashment in light of section 43B (f) of the Act, which disallowance has been made on misappreciation of the statutory provisions of the Act and thus, should be deleted.
3.1 That the learned CIT (Appeals) has erred in sustaining the said disallowance by failing to appreciate the replies/ evidences furnished by the assessee - appellant and the disallowance so sustained is based on irrelevant and extraneous considerations and purely on surmises and conjectures, as such, disallowance so sustained is wholly untenable on facts and in law.
The appellant reserves the right to add alter amend delete or modify any/all grounds of appeal before or at the time of hearing of the appeal.”
3. Ground No. 1 is of general in nature and needs no separate adjudication.
3. Ground No. 2 with sub-grounds has not been pressed by the ld. counsel for the assessee. Therefore, the same are dismissed as not pressed.
4. Ground No. 3 relates to the disallowance of a sum of Rs. 1,40,91,711/- towards leave encashment in light of section 43B(f) of the I.T. Act, 1961.
5. Briefly stated, the facts of the case are that during the course of scrutiny assessment proceedings, and on perusal of the profit and loss account and other details furnished by the assessee, the Assessing Officer noticed that the assessee company has shown provision for leave encashment of Rs. 1,40,91,711/-. The Assessing Officer found that in earlier years, similar provisions were made which were added back by the Assessing Officer. Basis the past history, the Assessing Officer made the addition of Rs. 1,40,91,711/-.
6. The assessee carried the matter before the ld. CIT(A) but without any success.
7. While dismissing the appeal, the ld. CIT(A) followed the order of his predecessor for A.Y 2012-13.
We find that this Tribunal in A.Y 2012-13 in to 4308/DEL/2017 has held as under:
“37. Ground No.4 for the AY 2012-13 is regarding disallowance of leave encashment.
The Ld. Sr. Counsel for the assessee has farely submitted that in view of the judgment of the Hon’ble Supreme Court in the case of UOI Vs. Exide Industries 273 Taxmann 189, the claim of the leave encashment is not allowable for the year under consideration. Thus, he has pleaded that the Assessing Officer may be directed to consider the issue in the subsequent year by following the judgment of the Hon’ble Supreme Court in the case of UOI vs M/s Exide Industries Ltd.
On the other hand, the Ld. DR has submitted that since this claim is not allowable for the year under consideration therefore, no direction is required to be given to the Assessing Officer for the subsequent years.
We have considered the rival submissions as well a material available on record. There is no dispute that this expenditure on account of leave encashment has not been actually paid by the assessee to the employees during the year under consideration therefore, in view of the judgment of the Hon’ble Supreme Court in the case of UOI vs Exide Industries Ltd. (Supra), the same is allowable as deduction in the year of actually payment and not in the year when the provisions is made. Therefore, this ground of the assessee’s appeal stand dismissed. However, the Assessing Officer is directed to consider the claim of the assessee in the year when actual payment is made towards the leave encashment.”
On finding parity of facts qua the issue, respectfully following the decision of the coordinate bench [supra], we direct accordingly.
In the result, the appeal of the assessee in is allowed in part for statistical purposes.
The order is pronounced in the open court on 16.03.2023.