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Income Tax Appellate Tribunal, MUMBAI BENCHES “H”, MUMBAI
Per Amit Shukla, Judicial Member
The aforesaid appeal has been filed by the assessee against impugned order dated 27.02.2015, passed byLd. CIT(Appeals)-16, Mumbai for the assessment passed u/s. 143(3) of the I.T.Act for A.Y. 2011-12. The assessee is aggrieved by the disallowance for provision for leave encashment expenses of Rs.19,01,169/-.
The brief facts qua the issue are that the assessee has made provision towards leave encashment for an amount of Rs.19,01,169/-.
M/s. Birla Sunlife Asset Management Co. Ltd. The said provision remained unpaid to the employees till the date of filing of the return of income. For creating the provision, the assessee has relied upon actuarial certificate and in support of said claim, the assessee had relied upon the decision of Hon’ble Calcutta High Court in the case of ‘Exide Industries Limited vs. UOI’, reported 292 ITR 470, wherein the Hon’ble High Court has held that provisions of section 43B(f) is unconstitutional and, therefore, such a provision of leave encashment should be allowed as deduction even if it is not paid during the time limit prescribed u/s. 43B. The learned AO observed that the said judgment of the Hon’ble Calcutta have been stayed by the Hon’ble Supreme Court vide its interim order, therefore, the judgment of Hon’ble Calcutta High Court cannot be followed.He further held that in the assessee’s own case for A.Y. 2008-09 and 2010-11, similar addition has been confirmed.The learned CIT(A) too following the earlier year order of the CIT(A) has confirmed the said disallowance.
After hearing both the parties and on perusal of the impugned order and material placed on record, we find that the Tribunal in the assessee’s own case for the A.Y. 2010-11 had set aside this matter to the file of the AO to decide the issue afresh after the decision of the Hon’ble Supreme Court. The relevant observation and findings of the Tribunal in this regard reads as under:
M/s. Birla Sunlife Asset Management Co. Ltd. “6. We have considered the rival submissions. It iscorrect that the decision of the Hon’ble Kolkata High Court in the case of “Exide Industries Ltd.” (supra) has been stayed by the Hon’ble Supreme Court vide order dated 08.09.08 passed in SLP to Appeal (Civil) ...CC 12060/2008 wherein the Hon’ble Supreme Court has made the following observations:
“UPON hearing counsel the Court made the following ORDER
Issue notice.
In the meantime, there shall be stay of the impugned judgment, until further order.”
We further find that the Hon’ble Supreme Court vide order dated 08.05.2009, passed in SLP (Civil No.22889/2008) while granting the leave to file appeal, has made the following observations:
“ORDER Delay condoned. Leave granted.
Pending hearing and final disposal of the Civil Appeal, Department is restrained from recovering penalty and interest which has accrued till date. It is made clear that as far as the outstanding interest demand as of date is concerned, it would be open to the Department to recover that amount in case Civil Appeal of the Department is allowed.
We further make it clear that the assessee would, during the pendency of this Civil Appeal, pay tax as if Section 43B(f) is on the Statute Book but at the same time it would be entitled to make a claim in its returns.”
A perusal of the above observations reveals thatwhile accepting the petition for leave to file the appeal vide order dated 8.05.2009, the Hon’ble Supreme Court has directed that ending the hearingand disposal of the Civil Appeal, the Department is restrained from recovering penalty and interest which has accrued till date. It has also been madeclear that it would be open to Department to recover the amount of outstanding interest demand in case the appeal of the Department is allowed. It has also been directed that during the pendency of the Civil Appeal, the assessee willpay tax as M/s. Birla Sunlife Asset Management Co. Ltd. if section 43B(f) is on statute book but at the same time the assessee would be entitled to make a claim in this respect in its returns.
In view of the observations of the Hon’ble Supreme Court, in our view, it will be proper to dispose of this appeal in the light of the order of the Hon’ble Supreme Court dated 08.05.2009 passed in the case of “CIT vs. Exide Industries Ltd.” (supra). We therefore dispose of the present appeal with a direction that the assessee will pay the tax as if section 43B(f) is on the statute book, however, till the decision of the Hon’ble Supreme Court in the case of “CIT vs. Exide Industries Ltd.” (supra), the Revenue will not recover the penalty and interest which may accrue till the decision of the appeal by the Hon’ble Supreme Court in the case of “Exide Industries Ltd.” It would be open to the Department to recover the outstanding interest demand in case the Civil Appeal of the Department in the case of “Exide Industries Ltd.” (supra) is allowed by the Hon’ble Supreme Court. Subject to our above observations, the matter is restored to the file of the AO to be adjudicated afresh as per the decision of the Hon’ble Supreme Court in the case of “Exide Industries Ltd.” (supra).”
Thus, following the earlier year precedence, we restore this matter to the file of the AO with similar directions for this year also.
In the result, the appeal of the assessee is treated as allowed for statistical purposes.
Order pronounced in the open court on this 17th day of January 2017