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Income Tax Appellate Tribunal, HYDERABAD BENCH “B”, HYDERABAD
Before: SMT. P. MADHAVI DEVI & SHRI S. RIFAUR RAHMAN
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH “B”, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA No.1489/Hyd/2018 Assessment Year: 2012-13 Deputy Commissioner Vs. Andhra Pradesh State of Income Tax, Seeds Development Circle-1(1), Corporation Limited, Hyderabad. Hyderabad. PAN: AABCA 6530 F (Appellant) (Respondent) Assessee by: None Revenue by: Sri K. Mohan Reddy, DR Date of hearing: 12/11/2018 Date of pronouncement: 15/11/2018 ORDER PER Smt. P. Madhavi Devi, J.M.:
This is Revenue’s appeal for the assessment year 2012-13 against the order of the CIT (A)-1, Guntur dated 24.04.2018. The Revenue has raised the following grounds of appeal:-
“1. The order of the CIT(A) is erroneous on facts as well as in law. 2. The Ld. CIT(A) erred in deleting the addition of Rs. 89,64,176/- made u/s 43B(f) of the I.T. Act, 1961 by the A.O. towards the Leave Encashment.”
Brief facts of the case are that the assessee-company, carrying on the business of production / procurement of seeds, filed its return of income for the A.Y. 2012-13 on 29.09.2012 admitting income of Rs.
5,00,95,950/-. During the assessment proceedings u/s 143(3) of the Act, the A.O. observed that the assessee had debited a sum of Rs. 89,64,173/- under the head ‘Employee Benefit Expenses’ towards ‘EL encashment’. The assessee was asked to explain as to whether the amount of Rs. 89,64,173/- was actually paid or only created a provision. In response to the same, the assessee submitted that it was an ascertained liability but was not paid to the employees concerned. The A.O. thus asked as to why the same should not disallowed in view of the express provisions of section 43B(f) of the Act. In response to the same, the assessee relied upon the judgment of the Hon’ble Andhra Pradesh High Court in the assessee’s own case for the A.Y. 2008-09 wherein it was held that the Earned Leave encashment is payable by the employer to its employees towards their accumulated earned leave and therefore, this is not a provision and in fact it is due amount earned by the employees kept by the employer up to the date of their retirement and only the payment is deferred and therefore, it is an ascertained liability and it is allowable as an expenditure. The A.O, however, observed that a SLP has been preferred against the AP High Court judgment and therefore, to keep the issue alive, the amount of Rs. 89,64,173/- was disallowed and brought it to tax.
Aggrieved, assessee preferred an appeal before the CIT(A), who allowed the appeal of the assessee relying on the jurisdictional High Court judgment in the assessee’s own case for the earlier assessment year. Aggrieved, Revenue is in appeal before us.
After taking into consideration the judgment of the Hon’ble Supreme Court against the order of the High Court of Kolkata in the case of Exide Industries Ltd vs. Union of India, we find that the CIT(A) has only followed the relevant judgment of the Hon’ble jurisdictional High Court in the assessee’s own case and also the judgment of the
Hon’ble Supreme Court. Therefore, we see no reason to interfere with the order of the CIT(A) and the appeal of the Revenue is dismissed.
In the result, appeal of the Revenue is dismissed. Pronounced in the open Court on 15th November, 2018.
Sd/- Sd/- (S. RIFAUR RAHMAN) (P. MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER Hyderabad, Dated: 15th November, 2018 OKK Copy to:- 1) M/s. Andhra Pradesh State Seeds Development Corporation Limited, 5-10-193, 2nd Floor, HACA Bhavan, Opp. Public Garden, Hyderabad. 2) Dy. CIT, Circle-1(1), 8th Floor, C-Block, R.No.836, IT Towers, Hyderabad – 500 004. 3) The CIT(A)-1, Guntur. 4) The Pr. CIT-1, Hyderabad 5) The DR, ITAT, Hyderabad 6) Guard File