Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, MUMBAI BENCHES “SMC”, MUMBAI
Before: Shri Joginder Singh,
आदेश / O R D E R The assessee is aggrieved by the impugned order dated 03/09/2015 of the Ld. First Appellate Authority, Mumbai. First ground raised by the assessee pertains to confirming the addition of provision of leave encashment M/s Harinagar Sugar Mills Ltd. amounting to Rs.34,54,670/- u/s 43B of the Income Tax Act, 1961 (hereinafter the Act).
During hearing, the crux of arguments advanced by Shri Jayesh Desai, ld. counsel for the assessee, is that identically the issue was considered by the Tribunal for assessment year 2007-08. The ld. counsel also furnished the copy of the order dated 08/05/2015 (ITA No.1062 and 205/Mum/2011). This factual matrix was not controverted by the ld. DR, Shri V.S. Jadhav.
2.1. I have considered the rival submissions and perused the material available on record. In view of the above, I am reproducing hereunder the relevant portion of the order dated 08/05/2015 (ITA No.205/Mum/2011) for ready reference:-
11. Ground No.2 is relating to disallowance on account of provision for leave encashment. The assessee had claimed deduction for provision made for leave encashment amounting to Rs.19,74,366/- which was added by the AO to the income of the assessee under section 43B of the Act. The assessee claimed that the provision for leave encashment was ascertained liability of the company and the same should not be construed as the item covered by section 43B of the Income Tax Act in view of the decision of the Hon’ble Kolkata High Court in the case of “Exide Industries Ltd.
292 ITR 470. The Assessing Officer however, held that the said amount was remained unpaid and therefore the provision for leave M/s Harinagar Sugar Mills Ltd. encashment was squarely covered under the provisions of section 43B. In appeal, the Ld. CIT(A) also upheld the finding of the AO.
Before us, the Ld. A.R. of the assessee has brought our attention to the decision of the co-ordinate Bench of the Tribunal dated 23.01.2015 in the case of “Aaditya Birla Finance Ltd. Vs. ACIT” wherein the Tribunal, while relying upon various other decisions of the Tribunal and adopting the same line, has restored the matter to the file of the AO observing that since the matter in the case of Exide Industries Ltd. (supra) was pending before the Hon’ble Supreme Court, the AO to adjudicate the issue afresh in the light of the decision of the Hon’ble Supreme Court as may come in the case of “Exide Industries Ltd.” (supra). The relevant part of the decision of the coordinate Bench in the case of “Aaditya Birla Finance Ltd. Vs. ACIT” (supra) for the purpose of reference is reproduced as under:
4.2 At the outset Ld. AR of the assessee has produced before us a copy of order of the Tribunal in the case of the sister concern of the assessee M/s. Birla Insurance Advisory & Broking Services Ltd., in ITA No.7531/Mum/2010. The Tribunal in the said case has restored the matter on the identical issue to the file of the AO while relying upon the decision in the case of Essar Exploration and Production India Ltd. vs. ACIT in order dated 8/8/2012. The operating part of the order for the sake of convenience is reproduced as under:
“3. At the outset Ld. AR of the assessee has produced before us a copy of order of the Tribunal dated 8/8/2012 in in the case of Essar M/s Harinagar Sugar Mills Ltd. Exploration & Production India Ltd. vs. ACIT, order dated 8/8/2012 , in which similar issue came up for consideration of ITAT. Before ITAT reference was made to the aforementioned decision in the case of M/s. Universal Medicare Pvt. Ltd. vs. ACIT(supra), and after hearing both the parties and considering the issue that in another matter in the case of Exide Industries Ltd. vs. Union of India, 292 ITR 470(Cal), where provisions of section 43B(f) were held to be arbitrary and in Special Leave Petition before Hon’ble Apex Court vide order dated 8/9/2008 the judgment of Hon’ble Culcutta High has been stayed and also the fact that Hon’ble Bombay High Court has admitted the issue in consideration in the appeal filed by the department in the case of M/s. Universal Medicare Pvt. Ltd.(supra), the matter was restored back to the file of AO with the following observations: “7. We observe that Mumbai Tribunal by its order dated 30.3.2009 in the case of Universal Medicare Pvt Ltd. (supra) allowed the claim of provision for leave encashment on the basis of decision of Hon’ble apex Court in the case of Bharat Earth Movers (supra) as the Honble Calcutta High Court in the case of Exide Industries (supra) struck down the provision of section 43B(f) being arbitrary, unconscionable. Further, the department filed SLP before Hon’ble apex Court against the decision of Hon’ble Calcutta High Court in the case of Exide Industries Ltd (supra) by its order dated 8.9.2008 in SLP No.12060/2008 has stayed the operation of judgment of Hon’ble Calcutta High Court. Further, it is also a fact that Hon’ble Bombay High Court has admitted the issue under consideration in the appeal filed by department in the case of Universal Medicare Pvt Ltd (supra). At the time of hearing, Id A.R. submitted that the said appeal is yet to be disposed of. We also observe that ITAT Kolkata Bench by its order dated 30.1.2012 considered the said issue and by following earlier decision on identical issue in the case Ernst & Young Pvt Ltd. (supra) has restored the matter to the file of AC with a direction to adjudicate the same as per decision of M/s Harinagar Sugar Mills Ltd.
Hon’ble apex Court in the case of Exide Industries Ltd (supra), In view of above and respectfully following the earlier decisions (supra), we set aside the orders of authorities below and restore the matter back to the file of AO for adjudication afresh as per the decision of Hon’ble apex Court in the case of Exide Industries Ltd (supra).” 3.1 Referring to the above observation it was pleaded by Ld. A.R that the matter may be restored back to the file of AO with similar directions.
Ld. D.R did not have any objection to such request of Ld. A.R.
In this view of the situation, after hearing both the parties, respectfully following subsequent decision of the Tribunal on this issue in the case of Essar Exploration & Production India Ltd.,(supra), we restore this issue to the file of A.O with similar directions. The relevant observations have already been reproduced. We direct accordingly”. 4.3 The Ld. Representatives of the parties submitted that they have no objection if the matter in this case also be restored to the file of AO with a direction to decide the same in the light of above reproduced directions. This issue is accordingly restored to the file of AO to decide the same as per the directions given in the case of sister concern of the assessee as reproduced above.”
The Ld. A.R. as well as the Ld. D.R., in this case, have also stated that they have no objection if the matter is restored to the file of the AO as per the above reproduced directions. This issue is accordingly restored to the file of the AO as per the above reproduced directions of the co-ordinate Bench of the Tribunal.
2.2. Before me, the ld. counsel for the assessee as well as the ld. DR fairly agreed that in the light of the M/s Harinagar Sugar Mills Ltd. above decision, this issue may be remanded back to the file of the ld. Assessing Officer, consequently, the issue is restored back to the file of the ld. Assessing Officer to decide as per the direction contained in the aforesaid order and decide in accordance with law, thus, this ground is allowed for statistical purposes.
The next ground pertains to disallowance made u/s 14A of the Act read Rule 8D of the Rules. The crux of argument advanced on behalf of the assessee is that the disallowance may be restricted to 0.5% of average investment as per Rule-8D(2)(iii) of the rules. On the other hand, the ld. DR, pointed out that this issue was not pressed before the ld. Commissioner of Income Tax (Appeals). In reply, the ld. counsel for the assessee, invited my attention to page-16 of the paper book containing notes to the financial statements for the year ending 31/03/2012. Since, the ground was not pressed before the ld. Commissioner of Income Tax (Appeals), I am not much satisfied with the argument of the assessee, however, in view of the mandate of Article 265 of Constitution of India to the effect that only due taxes has to be levied/collected and without going into much deliberation, I remand this issue also to the file of the ld. Assessing Officer to examine the claim of the assessee and after providing due opportunity of being heard, decide in accordance with law. This ground is also allowed for statistical purposes.
M/s Harinagar Sugar Mills Ltd. Finally, the appeal of the assessee is allowed for statistical purposes.
This order was pronounced in the open in the presence of ld. representative from both sides at the conclusion of the hearing on 28/01/2016.