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Income Tax Appellate Tribunal, “B” BENCH, KOLKATA
Before: Shri M. Balaganesh
This appeal of the assessee arises out of the order of the Learned CIT(A)-VIII, Kolkata in Appeal No. 182/CIT(A)-VIII/Kol/11-12 dated 07/12/2012 for the assessment year 2009-10 against the order of assessment framed by the Learned AO u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the ‘Act’).
The only issue to be decided in this appeal is as to whether the assessee is entitled for deduction towards leave encashment amounting to Rs.38,07,649/- u/s. 43B(f) of the Act.
The brief facts of this issue are that the assessee has made a provision for leave encashment amounting to Rs. 38, 07,649/- in its P & L account and claimed the same as deduction in its return of income. The ld. AO during the course of assessment proceeding disallowed the same as per provision of section 43B(f) of the Act, wherein the leave encashment could be granted as deduction only on payment basis. This action of the 1 M/s. Bates India Pvt. Limited ld.AO was upheld by the ld.CIT(A) on 1st appeal. Aggrieved, the assessee is in appeal before us on the following grounds :- 1(a). That on the facts and in the circumstances of the case, the learned CIT(Appeals) erred in confirming the action of Assessing Officer in disallowing provision for leave encashment amounting to Rs. 38,07,649 invoking the provisions of section 43B of the Act. 1(b). That on the facts and in the circumstances of the case, Assessing Officer erred in disallowing the impugned sum disregarding a binding decision of the Hon’ble High Court of jurisdiction.
None appeared on behalf of the revenue. So we have proceeded to dispose off the appeal after hearing the ld.AR and perusing the material available on record.
The ld. AR argued that the issue is covered by the decision of the Hon’ble Jurisdictional Calcutta High Court in the case of Exide Industries Ltd Vs. Union of India reported in (2007) 164 Taxman 9 (Cal)/292 ITR 470(Cal). On further appeal by the revenue before the Hon’ble Supreme Court, the Hon’ble Supreme Court initially had stayed the judgment of the Hon’ble Jurisdictional Calcutta High Court in the case of (referred to supra), but in subsequent proceedings it upheld the constitutional validity of the provision of section and permitted the assesses’ to claim the provision of leave encashment in its return of income as deduction , but directed the assesses’ to pay the taxes on the same as if section 43B(f) is prevailing in the statute.
We have heard the ld.AR and perused the materials available on record. We find that the issue has been dealt by the Hon’ble Jurisdictional Calcutta High Court in the case of assessee’s own (referred to supra), wherein the Hon’ble Calcutta High Court had struck down the constitutional validity as per provisions of section 43B(f) of the Act and placed reliance on the decision of the Hon’ble Apex Court in the case of Bharat Earth Movers Limited reported in 245 ITR 428(SC). We find that the appeal filed by the revenue on this issue, the Hon’ble Supreme Court had initially stayed the operation of the judgment of the Hon’ble Calcutta High Court vide order dated 8-9-2008. But later vide subsequent order dated 8/05/2009 in Appeal (Civil) Nos. 22889/2008 had held as under:-
2 M/s. Bates India Pvt. Limited
“UPON hearing counsel the Court made the following 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.”
In view of the above, we deem it fit and appropriate, in the interest of justice and fair play, to set aside this issue to the file of the ld.AO to pass a fresh order(s) on this issue based on the outcome of the main appeal on merits in the light of the judgment of the Hon’ble Supreme Court as stated ( supra). Accordingly, the grounds raised by the assessee in this appeal are allowed for statistical purpose.
In the result, the appeal of the assessee is allowed for statistical purpose as stated above.
THIS ORDER IS PRONOUNCED IN OPEN COURT ON 03-02-2016
Sd/- Sd/- ( N.V. Vasudevan, Judicial Member ) (M. Balaganesh, Accountant Member) Date:
Date 03-02-2016 Copy of the order forwarded to:- 1 The Appellant: M/s. Bates India Pvt. Ltd 55B Mirza Ghalib St, Kol-16. 3 M/s. Bates India Pvt. Limited
2 The Respondent- The Deputy Commissioner of Income-tax, Cir-8, Aaykar Bhaban, Kol-69.
3 The CIT
4.The CIT(A)