TIL LIMITED,KOLKATA vs. THE ACIT- RG-1, KOLKATA, KOLKATA

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ITA 1208/KOL/2014Status: DisposedITAT Kolkata08 February 2017AY 2007-20083 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal restored the matter back to the Assessing Officer. The AO was directed to await the decision of the Apex Court and decide the issue accordingly.

What were the facts?

The assessee claimed a deduction for provision for leave encashment on an accrual basis. The Assessing Officer disallowed this claim, which was confirmed by the CIT(A). The assessee relied on a jurisdictional High Court judgment, which was later stayed by the Supreme Court.

What were the issues?

Whether provision for leave encashment is allowable as a deduction on accrual basis when the jurisdictional High Court judgment supporting it is stayed by the Supreme Court.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 43B

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Income Tax Appellate Tribunal, KOLKATA BENCH “B” KOLKATA

Before: Shri A.T.Varkey & Shri Waseem Ahmed

आदेश /O R D E R

PER Waseem Ahmed, Accountant Member:-

1.

This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals)-I, Kolkata dated 28.02.2014. Assessment was framed by ACIT, Range-1, Kolkata u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) vide his order dated 31.12.2009 for assessment year 2007-08.

A.Y. 2007-08 TIL Ltd. Vs. ACIT, Rg-1 Kol. Page 2 Shri Saurabh Kedia, Ld. Authorized Representative appeared on behalf of assessee and Shri P.K.Mondal, Ld. Departmental Representative represented on behalf of Revenue.

2.

Only issue raised by assessee in this appeal is that Ld. CIT(A) erred in confirming the order of Assessing Officer by sustaining the disallowance for ₹1,29,73,646/- on account of provision for leave encashment.

3.

At the outset, it was observed that assessee has claimed expenses towards leave encashment for ₹ 1,29,73,646/- on accrual basis. Before us Ld. AR for the assessee submitted that the deduction on account of provision of leave encashment was claimed on the judgment of jurisdictional High Court in the case of Exide Industries Ltd. vs. Union of India (2007) 292 ITR 470 (Cal) and in this regard, Ld. AR frankly accepted that the judgment of Hon'ble jurisdictional High Court in the case of Exide Industries Ltd. (supra) has been stayed by the Hon'ble Apex Court vide order dated 08.05.2009 and the relevant extract is reproduced below:- “Pending hearing and final disposal of the Civil Appeals, 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 Statue Book but at the same time it would be entitled to make a claim in its returns.”

Further, Ld. AR for the assessee prayed that the matter can be restored back to the file of Assessing Officer for fresh adjudication in terms of decision of Hon'ble Apex Court. Ld. DR for the Revenue agreed to the submission of Ld. AR.

4.

In view of the above proposition, we are inclined to restore the matter back to the file of AO with a direction to await for the decision of Hon'ble Apex A.Y. 2007-08 TIL Ltd. Vs. ACIT, Rg-1 Kol. Page 3 Court and decide accordingly. Hence, this ground of assessee is allowed for statistical purpose.

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