DCIT, CIR-11, KOLKATA, KOLKATA vs. M/S INDIAN EXPLOSIVES LTD., KOLKATA

M/s Indian Explosives V/s. DCIT, Circle-11, P-7, Ltd., 10A, Lee Road, Chowringhee Square, Kolkata-20 Kolata-69 [PAN No.AAACI 6548 N] .. �तया�ेपक/Co-objector अपीलाथ�/Appellant Shri Kanchan Kaushal, CA & आवेदक क� ओर से /By Assessee Shri Rishabh Mlhotra, Advocate Md. Usman, CIT-DR राज व क� ओर से/By Revenue 13-02-2018 सुनवाई क� तार�ख/Date of Hearing 27-04-2018 घोषणा क� तार�ख/Date of Pronouncement आदेश /O R D E R PER Waseem Ahmed, Accountant Member:- This appeal is preferred by the Revenue against the order of Commissioner of Income Tax (Appeals)-XII, Kolkata dated 28.10.2013 for the Assessment Year 2008-09 and the same is being disposed of along with Cross Objection (CO) filed by the assessee being CO No.22/Kol/2015.

& CO 22/Kol/2015 A.Y. 2008-09 DCIT Cir.11 Kol. Vs. M/s Indiani Explosives Ltd. Page 2 Md. Usman, Ld. Departmental Representative appeared on behalf of Revenue and Shri Kanchan Kaushal, Ld. Authorized Representative and Shri Rishabh Malahotra, Ld. Advocate both appeared on behalf of assessee.

1. That on the facts and circumstances and as per law of the case Ld. CIT(A) erred in deleting the addition of Rs.110,54,18,881/- on account of suppression of sale without appreciating the findings of the AO.

2. That on the facts and circumstances and as per law of the case Ld. CIT(A) erred in accepting the reasons for variation between the average cost of inventories and sale value.

3. That on the facts and circumstances of the case Ld. CIT(A) erred in observing that no material has been brought on record to hold that there could have been any sale of stock outside the account. Since, the Assessing Officer has not disputed the quantity of stock sold, the observation of Ld. CIT(A) is not justified.

4. That on the facts and circumstances and as per law of the case Ld. CIT(A) erred in deleting the addition of Rs.110,54,18,881/- on account of suppression of sale since in the course of remand proceedings, the assessee failed to substantiate its clam that closing stock constitutes of explosives of higher value.”

4. Ground No.1 to 4 are inter-related and therefore being taken up together. The issues raised are that Ld. CIT(A) erred in deleting the addition of ₹110,54,18,881/- on account of suppression of sale.

5. Briefly stated facts are that assessee in the present case is a limited company and engaged in business of manufacturing of commercial / blasting explosives and initiating explosives, providing service of rock-on-ground operations and purchase & sale of safety fuses. The assessee in the year under consideration has manufactured certain types of explosives which were sold to its customers. The details of explosives and its sale price shown in the profit and loss account stand as under:- i) Commercial/blasting explosives Rs.20251 Per Mt. ii) Detonating fuses; Rs.3498432 Per million meters & CO 22/Kol/2015 A.Y. 2008-09 DCIT Cir.11 Kol. Vs. M/s Indiani Explosives Ltd. Page 3 iii) Detonators Rs.17227671 Per million numbers iv) Primex/PETN Rs.161253 Per Mt. However, the Assessing Officer during the course of assessment proceedings observed that the average value of opening stock and closing stock is higher than the sale price shown by the assessee. The average value of opening stock and closing stock stand as under:- Value of op. stock Value of cl. Stock Avg. value of stock Commercial/blasting Explosives Rs.29542 mt Rs,25062/MT Rs.27302/MT Detonating fuses Rs.4545000/MM Rs.4434375/MM Rs.4489687/MM Detonators Rs.25443252/MN Rs.23817012/MN Rs.24630132/MN Primex/PETN Rs.216729/MT Rs.215751/MT Rs.216240/MT In view of above, the AO observed that the assessee has sold its goods at a price lower than the cost. The necessary details showing the difference in the sale-price and average value of stock is detailed as under:- Avg. value of stock Sale price Difference in price Commercial/blasting Explosives Rs.27302/mt Rs,20251 per MT Rs.7051/ MT Detonating fuses Rs.4489687/MM Rs.3498432/MM Rs.991255/MM Detonators Rs.24630132/MN Rs.17227671/MN Rs.7402461/MN Primex/PETN Rs.216240/MT Rs.161253/MT Rs.54987/MT On being confronted, the assessee submitted as under : As regards your query raised during the course of hearing on 08-12- 2011 asking for explanation as to why sale price per unit of goods is lower than that of finished goods while comparing point No. 14 & 15 of notes to account : In this regard it may please be noted that class of goods as mentioned in point 14 & 15 of notes to account, comprises broad head of goods manufactured by the company. In each of the heads varieties product of different heads as manufactured are included. For example, under the head commercial/blasting explosives, the types of explosives that are included are bulk and package explosives. That are included are bulk and packaged explosives. The total quantities of the same as sold by the company during the relevant financial year as under:- Nature of Quantity sold (in Total sales value Rate per ton (in explosives tones) (in Rs) Rs)

ITA No.58/Kol/2014 & CO 22/Kol/2015 A.Y. 2008-09 DCIT Cir.11 Kol. Vs. M/s Indiani Explosives Ltd. Page 4 Bulk 78856.00 1352838334 17155.81 Packaged 35653.63 966134666 27098.27 Total 114509.63 2318973000 20251.34 It may further be noted that since bulk explosives are manufactured in liquid form the same cannot be stored by the company. The said explosives are manufactured by the company based on order received from customers only. Accordingly, the valuation of inventories that re disclosed under the head the ‘Commercial/Blasting explosive’ comprised of packaged explosives only. The details as regards valuation of inventory are as under:- Name of Closing quantity Value of goods Rate per ton (in explosives as at 31.3.2008 (in Rs) Rs) (in tones) Packaged 1812.37 45422000 25062.21 Total 1812.37 45422000 25062.21 On perusal of the same, your kindself will appreciate that rate per ton of packaged goods inventory is Rs.25,062.21 whereas the rate per ton of packaged goods sold is Rs.27098.27 i.e rate per tonn of sold quantity is much higher than valuation of finished goods. The said fact hold good for other classes of goods too which comprises of products of different grades manufactured by the company.” However, the AO during the assessment proceedings further observed certain other facts as detailed under:- a) The assessee failed to produce the stock register and production register in support of provision of sale of bulk and package explosive; b) In the audited accounts, there is no bifurcation of commercial blasting explosive into bulk and package explosive; c) No explanation was offered by assessee in support of other explosive as discussed above during assessment proceedings; In view of above, AO disregarded the contention of assessee and worked out under-valuation of sale for ₹110,54,18,881/- as detailed under:- Quantity sold x Difference in sale price Total under-valuation of sale price Bulk/commercial Explosives 114509.63 MT Rs.7051/MT Rs, 807407401 Detonating 9.57 NN Rs,991255/MM Rs 9486315 & CO 22/Kol/2015 A.Y. 2008-09 DCIT Cir.11 Kol. Vs. M/s Indiani Explosives Ltd. Page 5 fuses Detonators 37.80 MN Rs.7402461/MN Rs. 279813025 Primex/PETN 158.44 MT Rs.54987/MT Rs. 8712140 Total Rs.1105418881 The above difference for ₹110,54,18,881/- was treated by AO as under reporting of sales which was added to the total income of assessee.

is accordingly allowed.” The Revenue, being aggrieved is in appeal before us.

7. Ld. DR vehemently relied on the order of AO whereas Ld. AR for the assessee filed paper book which is running pages from 1 to 227 as well as revised paper book comprising pages 1 to 70 and submitted that the AO failed to appreciate that the various class of goods in respect of which the average stock price and sale price was arrived and arbitrarily compared did not represent one finished good item in respect of which such one to one comparison could be made. The different class of goods (like Commercial Explosives and Detonators) represented broad categories. Each of these categories included various sub-classes with number of products under it, each having different cost and sale price. Hence, the average stock price of a class of goods and the average sale price of such class was not capable of being compared on such thumb rule basis. The said classes of goods as shown in Product Catalogue are again sub- divided in to various sub-classes, size with different cost/unit which widely fluctuates. The above is further explained by taking example of bulk/packaged explosive category which constitutes majority of the total sales of the company. The addition has been made on pure surmise, assumption and conjecture without bringing any evidence on record establishing any act of alleged suppression of sales on the part of the respondent and liable to be stuck down. The AO without calling for any records from the respondent merely proceeded on his own notion in arriving at the average per unit price of various class of inventory as disclosed in the notes to accounts, arbitrarily comparing the same & CO 22/Kol/2015 A.Y. 2008-09 DCIT Cir.11 Kol. Vs. M/s Indiani Explosives Ltd. Page 11 with the average sale price per unit of such class of goods and coming to the conclusion that there being apparent difference in stock price and sale price, there was suppression of sales. It is a settled principle of law that such disallowance cannot be sustained and needs to be summarily deleted. Reliance was placed on the decision rendered by the Hon'ble Supreme Court in the case of Lalchand Bhagat Ambica Ram v. CIT (1959) 37 ITR 288 (SC). The sales are largely made by the respondent to big Institutional houses, Public Sector Companies major portion of which is on tender system which leaves no scope of manipulation of sale. Over 50% of the sales have been made to Public Sector Undertakings like Coal India Limited, based on tender systems. All the sales have been made as per contract price approved under the tender system. Hence, question of suppression does not arise. Copy of sample contracts were attached for evidence. Reliance in this regard was placed on the decision of the Hon'ble Income Tax Appellate, Bangalore in the case of Tellabs India (P.) Ltd v. ACIT (2014) 150 ITD 97 (Bang) and Hon'ble Income Tax Appellate Tribunal, Delhi in the case of DCIT v. Alcatel (1993) 47 ITD 275 (Del) wherein it was observed that when a party enters into an agreement with the Government of India, it cannot be alleged that the agreement was for avoidance of tax. The books of account maintained have been duly audited and copies of audited accounts were placed on record before the Assessing officer. The AO did not bring any material or evidence on record, to establish that the assessee suppressed sales. The AO did not record any finding in the assessment order for rejection of the book results within the meaning of section 145. Hence, without rejecting the books of accounts of the assessee which was duly audited by the independent auditors and without bringing any evidence on record, the action of the Assessing Officer in alleging suppression of sales is illegal and baseless. Reliance was placed on decision of Jurisdictional Tribunal in the case of ITO v. Smt. Premlata Gupta [ITA No.1662/Kol/2011] dated 21-06-2013 wherein the AO had made certain additions to sales since the closing stock was valued & CO 22/Kol/2015 A.Y. 2008-09 DCIT Cir.11 Kol. Vs. M/s Indiani Explosives Ltd. Page 12 higher than sales price. On appeal, before Ld. CIT(A) held that the assessee is following the valuation policy consistently and the books of accounts have not been rejected by the AO, addition cannot be made to sales. The order of the Ld. CIT(A) was upheld by the Jurisdictional ITAT. The AO failed to appreciate that the value of inventory based on which the average stock price was arrived included element of excise duty as per mandatory Accounting Standard - 2 (Valuation of inventory), whereas the turnover which was considered to arrive at the average sale price was- net of excise duty. Further, as per the valuation rules, inventory is required to be valued at cost or Net Realizable Value whichever is lower, however, the excise duty required to be added to such value needs to be based on expected ex-factory sale price. The AO further failed to appreciate that the major raw materials which go in manufacturing of explosives is Ammonium Nitrate (AN), the price of which is subjected to huge fluctuation in addition to other raw materials whose price also fluctuates. Thus, the sale of goods made at a particular price may not be comparable to average value of closing stock/opening stock whose valuation may get disproportionally distorted/ changed because of fluctuations in cost of raw- materials at any time during the previous year. The AO erred in not appreciating that valuation of inventory which is done at the beginning of the year (Opening Stock) or at the end of year (Closing Stock) is guided by mandatory Accounting Standard-2 and is valued at Cost or Net Realizable Value whichever is lower. Whereas the sale price is function of plethora of factors such as market forces, negotiated rate fixed as per sale agreement, relevant price fall clause in the agreement, competition, consideration of various risk inherent in business and other factors. The explosives being a restricted and highly regulated product with limited market players, with price being fixed based on tendering system, thus the question of suppression of sales does not arise. 7.2 It is further submitted that Explosives being an extremely restricted item, the purchase and sale made to vendors are hugely regulated and are under a ITA No.58/Kol/2014 & CO 22/Kol/2015 A.Y. 2008-09 DCIT Cir.11 Kol. Vs. M/s Indiani Explosives Ltd. Page 13 valid license issued by the Chief Commissioner of Explosives. The vendors are generally big institutional houses with whom prices are fixed based on tender system/ RFP issued by Public/Private Sector companies. Hence, the question of any suppression of sales does not arise. No disallowance of any alleged suppression of sales has been inflicted in the case of company in any past or in future assessments, even though the facts and circumstances remained the same. Though principle of res-judicata does not apply in income tax proceedings, the principle of consistency cannot be ignored particularly in an adjustment like the one made by the tax officer. Ld. AR further stated that the Ld.CIT(A) after duly considering the allegations of the AO in the assessment order, observations made by the AO in the remand report the arguments advanced by the assessee-company and the evidence available on record held that it was clear from the material placed on record, that the manufacturing and trading accounts are supported with quantitative details. There has not been any deviation of the method of accounting regularly employed by the Assessee Company. The explanation offered by the Assessee Company for variation between the average cost of inventories and sale value is convincing. It was also held that the Assessing Officer has not brought any material on record to hold that there could have been any sale stock outside the books of account, particularly when most of the sales are made to Government Agencies and public sector undertakings on the basis of agreements and intents. It is not a case where the book results have been rejected, nor the purchases, nor the sales doubted. It is well-settled that if at all there were sales outside books of account or unrecorded sales, only the margin of profit could have been assessed. Consequently, the addition of INR 110,54,18,881/- made on account of suppressed sales was deleted. In light of the facts stated, authorities cited and arguments submitted, the respondent most humbly prays that the appeal filed by the Revenue Department may kindly be ordered to be dismissed as the order of the Ld. CIT(A) is based on proper appreciation of & CO 22/Kol/2015 A.Y. 2008-09 DCIT Cir.11 Kol. Vs. M/s Indiani Explosives Ltd. Page 14 facts and law and the order of the commissioner order. The ld. AR vehemently supported the order of ld. CIT(A).

8.1 From the foregoing discussion we observe that the allegation of the AO is that the assessee has suppressed the sales. The observation of the AO was based on the basis of the difference in the valuation of opening & closing stock declared by the assessee viz-a-viz sale price of the products as observed from the audited financial statements. But the AO has not brought any iota of evidence suggesting that the assessee has made sale to any party outside the books of accounts. In our considered view the AO should have brought some material in support of his allegation of suppressed sale. Indeed the production of the assessee was subject to the excise duty and accordingly all the necessary records were duly maintained and no defect of whatsoever was pointed out in the excise records. Even for the sake of argument if it is assumed that the assessee has suppressed sale in its books of accounts meaning hereby it has sold its goods at a price less than the cost price then there should have been loss in the return of income, but on perusal of the assessment order we find that the assessee has filed its return of income declaring total income of Rs. 27.47 crores. Thus in our considered view the observation of the AO is based on wrong assumptions of facts. & CO 22/Kol/2015 A.Y. 2008-09 DCIT Cir.11 Kol. Vs. M/s Indiani Explosives Ltd. Page 15 We also note that the assessee during the appellate proceedings has demonstrated on sample basis that it has sold its products namely bulk & package explosive at a price higher than the cost. The necessary details of bulk & package explosive reflecting the cost of stock and sale price as submitted by the assessee before the ld. CIT(A) stands as under:- “For commercial/blasting explosives- (i) Difference in product mix. The total sales under the class-Commercial/blasting Explosives majorly constituted sale of bulk explosives having lower sale price, while the opening/closing stock primarily constituted of packaged explosives with a higher per unit price. The category-wise breakup of sales and stock position is explained as under:- Sales break up- Nature of Quantity sold (in Total sales value (in Rte per tonne (in explosives tones) Rs) (without excise Rs)(without excise duty) duty) Bulk 88,502.38 149,06,14,713 16,843 Packaged 26,007.25 82,83,58,172 31,851 Opening stock break up- Nature of Opening Value of goods Rate per tonne Rate per explosives quantity as at including (in Rs)(without tone (in 1st April, 07 (in excise duty (in excise duty) Rs)(without tones) Rs) excise duty) Bulk 170 24,24,426 14,212 11,860 Packaged 1,236 3,91,11,815 31,644 26,207 Total 1,406 4,15,36,240 29,530 24,467 Closing stock break up- Nature of Closing Value of Rate per tonne Rate per explosives quantity as at goods (in Rs)(without tone (in 31st March, including excise duty) Rs)(without 2008 excise duty excise duty) Bulk 511.20 80,07,812 15,663 13,074 Packaged 1301.10 3,74,14,628 28,757 23,090 Total 1812.30 4,54,22,440 25,063 20,264 On perusal of the same, it can be observed that apparent difference in sale price [Rs.20,251/- per unit) and stock price as considered by the Assessing Officer (opening stock 29,530/- and closing stock – Rs.25,063/-) in respect of commercial/blasting explosives is arising on account of difference in product mix which forms part of sales and closing stock of appellant. As can be observed the average sale price per unit of bulk explosives is higher than opening and closing per unit stock price of bulk explosives as can be reflected by this table- Commercial/blast Comparable price per unit at actual (without excise duty) & CO 22/Kol/2015 A.Y. 2008-09 DCIT Cir.11 Kol. Vs. M/s Indiani Explosives Ltd. Page 16 explosives Opening Sales Closing stock stock Bulk explosives 11,860 16,843 3,074 Similarly, the average sale price of packaged explosives is higher than the opening and closing stock price of packaged explosives ass can be reflected by this table:- Commercial/blast Comparable price per unit at actual (without excise duty) explosives Opening Sales Closing stock stock Packed explosives 26,207 31,851 23,090 As can be observed, the opening/closing inventories that are disclosed under the head ‘commercial / blasting explosives’ majorly comprised of packaged explosives having higher per unit price whereas the sales during the year majorly constituted of bulk explosives having lower per unit price. Hence, the average per unit price of inventory of the group ‘commercial / blasting explosives’ appears to be higher than the average sale price per unit of total sale – commercial/blasting explosives which on account of inclusion of bulk explosives in majority (having lower sale price) appears to be lower. The said apparent difference being on account of product mix and not on account of suppression of sales, no addition was called for. Similar facts applies for other class of goods for which we will file details explanation/evidences in the course of appeal hearing. Difference due to excise duly element which is included in stock but not included in sales while reporting in Schedule 20 of notes to account (pint No.14 and 15) It may further be noted that the apparent price difference is also on account of excise duty element. The Assessing Officer in the assessment order has compared the average sales price per unit of turnover (which is net off of excise duty) with average stock price of opening and closing inventory (which is inclusive of excise duty) and on noticing an apparent difference in both the prices (the sale price being lower than the average stock price) has concluded that there was a suppression of sale. From the above an inference can be drawn that the actually the loss as observed by the AO was arising on account of product mix in the valuation of stock. 8.2 We also note that there was no defect which was observed by the Excise Department challenging the production and sales shown by the & CO 22/Kol/2015 A.Y. 2008-09 DCIT Cir.11 Kol. Vs. M/s Indiani Explosives Ltd. Page 17 assessee. In case the assessee has suppressed the sales in its books of accounts then in our considered view the AO should have rejected the books of accounts of the assessee u/s 145(3) of the Act but the AO has not done so. Therefore the allegation of the AO that the assessee has suppressed sale is not sustainable. We also note that the valuation of closing stock and opening stock cannot be the basis of making the addition in the hands of the assessee on account of suppression of sales in view the fact these are two different accounting principles and cannot be compared. In case the assessee has declared the closing stock at a price higher than the cost price or market price than the profit of the assessee will rise in upward direction. The books of accounts of the assessee were duly audited and no defect of whatsoever was reported in the audit report. 8.3 It is also observed that the sales were made by the assessee mainly to big institutional houses, public sector under takings though tender system thus in such a scenario there remains no scope for the manipulating sale price. We also observe that the assessee has declared the value of opening and closing stock of the goods after including the element of Excise duty whereas the sale price is net of excise duty. Therefore both stock and sale price cannot be compared for the purpose of determining the suppressed sale. In this regard we note from point number 14 annexed to the audited financial statement specifying the turnover net of excise duty which is placed on page 28 of the paper book. 8.4 We also note that the AO alleged that the assessee failed to produce the stock register showing the daily production but in our considered that cannot be the basis holding that the assessee has suppressed sales. The ld. DR has also not brought anything on record contrary to the findings of ld. CIT(A) and arguments advanced by the ld. AR during the course of hearing. In view of above we find no reason to interfere in the order of ld. CIT-A. Hence the ground of appeal of the Revenue is dismissed.

9. In the result, Revenue’s appeal is dismissed. & CO 22/Kol/2015 A.Y. 2008-09 DCIT Cir.11 Kol. Vs. M/s Indiani Explosives Ltd. Page 18 Coming to assessee’s CO No.22/Kol/2015.

10. Grounds raised by assessee in its CO is reproduced below:- “1. That on the facts and in the circumstances of the case, the Ld. CIT(Appeals) erred in confirming the disallowance of Rs.27,92,435/- made by the Assessing Officer on account of provision for leave encashment.

2. That on the facts and in the circumstances of the case the Ld. CIT(Appeals) as well as the Assessing Officer erred in not appreciating that clause (f) of Section 43B providing for allowance of leave encashment on payment basis is arbitrary , unconscionable and de hors the Supreme Court decision in the case of Bharat Earth Movers, as held by the jurisdictional High Court in the case of Exide Industries Limited (292 ITR 470)

3. That on the facts and in the circumstances of the cases, the alleged addition by Assessing Officer on account of suppression of sales having accepted the books of account and without brining any evidence in respect of suppression of sales is illegal and arbitrary.

4. That on the facts and in the circumstances of the case, the addition made by the Assessing Officer on account of suppression of sales suffers from inherent accounting fallacy as the sales price can never be compared with stock price on such thumb-rule basis.

5. That the respondent craves leave to add to and to alter, amend, rescind or modify the grounds raised hereinabove before or at the time of hearing of the appeal.”

11. The first inter-connected issue raised by assessee in ground No.1 and 2 is that Ld. CIT(A) erred in confirming the order of AO by sustaining the disallowance of ₹27,92,435/- on account of provision for leave encashment.

12. The assessee during the year has credited provision for leave encashment for ₹40,47,930/- only. The assessee before filing the income tax return has paid a sum of ₹12,55,495/- on account of leave encashment only. However, AO treated the balance amount of leave encashment for ₹27,92,435/- as provision which is not liable for deduction u/s 43B of the Act. Accordingly, AO disallowed the same and added to the total income of assessee.

13. Aggrieved, assessee preferred an appeal before Ld. CIT(A) who confirmed the order of AO by observing as under:- “5.2.3 Decision: & CO 22/Kol/2015 A.Y. 2008-09 DCIT Cir.11 Kol. Vs. M/s Indiani Explosives Ltd. Page 19 I have considered the facts of the case and the submissions put forth on behalf of the appellant company. As per provisions of sec. 43B(f) ‘any sum payable by the assessee as an employer in lieu of any leave at the credit of the employee’ shall be allowed (irrespective of the previous year in which the liability to pay such sum was incurred by the assessee according to the method of accounting regularly employed by him) only in computing the income referred to in section 28 of that previous year in which such sum is actually paid by him: Provided that nothing contained in this section shall apply in relation to any sum which is actually paid by the assessee on or before the due date applicable in the case for furnishing the return of income under sub-section (1) of section 139 in respect of the previous year in which the liability to pay such sum was incurred as aforesaid and the evidence of such payment is furnished by the assessee along with such return’ Now, as per the provisions of section 43B(f), the appellant company is entitled for deduction in respect of an amount of Rs.12,55,495/- only, which has been paid before the due date applicable in the case for furnishing the return of income under sub-section (1) of section 139 in respect of the previous year in which the liability to pay such sum was incurred as aforesaid and the evidence of such payment is furnished by the assessee along with such return. The Assessing Officer has, in his remand report, submitted that the case of Exide Industries cited supra is sub judice before the Supreme Court. The appellant has also not brought any material on record to support its case with the view taken by the Hon'ble Supreme Court in the case of Bharat Earth Movers vs. CIT., particularly when the provisions of section 43B(f) has been brought on statute by Finance Act, 2001 w.e.f. 1.4.2002, after the decision of the Apex Court in that case. Having regard to the facts, I am of the view that the deduction for provision made under the leave encashment scheme is allowable for an amount of Rs.12,55,495/- only, which has been paid before the due date applicable in the case for furnishing the return of income under sub-section (1) of section 139 of the Act. This meets the alternative submissions as made by the appellant. The disallowance to the extent of Rs.27,92,435/- is sustained and the appellant gets a relief of Rs.12,55,495/- on this ground.” The assessee, being aggrieved with such order of Ld. CIT(A) has now come in CO before us.

14. Ld AR for the assessee before us submitted that the provision created for leave encashment is allowable by the judgment of Hon'ble jurisdictional High Court in the case of Bharat Earth Movers vs. CIT (2000) 245 ITR 428/112 Taxman 61 – Exide Industries Ltd. vs. Union of India (2007) 164 taxman 9 (Cal) & CO 22/Kol/2015 A.Y. 2008-09 DCIT Cir.11 Kol. Vs. M/s Indiani Explosives Ltd. Page 20 On the other hand, Ld. DR supported the order of Authorities Below.