Bharat Earth Movers v. CIT

245 ITR 428Supreme Court of India2000#52 most cited

What is Bharat Earth Movers v. CIT authority for?

A business liability that has definitely arisen in an accounting year is deductible even if it needs to be quantified and discharged later, as long as its incurring is certain and can be reasonably estimated.

901

judgments rely on this decision, according to BharatTax’s citation analysis of 367,164 Indian tax judgments — from 2006 to 2026.

Also referred to as

Bharat Earth Movers v CIT · 245 ITR 428 · ascertainable liability · unascertainable liability · accrued liability · provision for expenses · deduction · accounting year · future discharge

Also reported as

112 Taxmann 616 SCC 645162 CTR 325

Sections most often in play

Section 37(1)Section 143(3)Section 115JBSection 14ASection 40(a)(ia)Section 195Section 148Section 1961
Read the full judgment

Issues it is cited on

section 35dmercantile system of accountingenduring benefitintangible assetssection 40(a)(i)section 35revenue expenditurebook profitssection 37(1)section 115jbamalgamationsection 37

Judgments citing Bharat Earth Movers v. CIT

Asst CIT 16(3), Mumbai vs. Shree Balkrishna Exports, Mumbai

In the result, both the appeals filed by the Revenue and both the cross objections filed by the assessee are dismissed

ITA 4185/MUM/2014[2009-10]Status: DisposedITAT Mumbai08 Feb 2017AY 2009-10

Bench: Shri B.R. Baskaran (Am)& Shri Pawan Singh (Jm)

Section 43(5)(c)

…following decisions in order to hold that the above said claim of the assessee cannot be considered as a Notional loss:- a) Woodward Governnor India P. Ltd. (312 ITR 254) b) DCIT Vs. Bank of Bahrain and Kuwait (2010) 41 SOT 290 c) Bharat Earth Movers Vs. CIT (245 ITR 428) d) ONGC Vs. CIT (322 ITR 180) 8. The Ld D.R relied upon the decision rendered by the co-ordinate bench in the case of S. Vinodkumar Diamonds Pvt. Ltd (supra). However, as pointed out by Ld D.R, the above said decision cannot be taken support of in view of the observations made by Hon’ble Bombay High Court in the case of M/s. D. Chetan & Co.(sup…

Asst CIT 16(3), Mumbai vs. Allied Gems Corporation (Bombay), Mumbai

The appeal of the Revenue is partly allowed, as above

ITA 2502/MUM/2014[2009-10]Status: DisposedITAT Mumbai20 Jan 2017AY 2009-10

Bench: Shri G.S.Pannu & Shri Ramlal Negithe Acit, 16(3), 2Nd Floor,Matru Mandir, Tardeo Road, Mumbai 400 007 ...... Appellant Vs. M/S. Allied Gems Corporation (Bombay), 2505, Panchratna, Opera House, Mumbai -400 004 Pan: Aaefa 7201P .... Respondent Appellant By : Shri A.Ramachandran Respondent By : Shri Jignesh A.Shah Date Of Hearing : 22/09/2016 Date Of Pronouncement : 20 /01/2017

For Appellant: Shri A.RamachandranFor Respondent: Shri Jignesh A.Shah
Section 143(3)

…y when measurability and collectability are reasonably certain. 2.4.15 In view of the Principle of Accountancy considered by the Hon'ble Supreme Court in the plethora of cases cited (supra) including the celebrated decision in the case of Bharat Earth Movers, 245 ITR 428 (SC) and Madras Industries & Investment Corporation, 225 ITR 802 (SC). I am of the considered opinion that the appellant was correct in following the principles of prudence as the sum of Rs.49,64,937/- was not ultimately realized. In any case, this loss would have to be allowed in the next year and therefore, it is only a question of timing which…

DCIT, Circle - 11, Kolkata vs. M/S. I M C Ltd, Kolkata

Appeal is dismissed

ITA 371/KOL/2012[2007-08]Status: DisposedITAT Kolkata18 Jan 2017AY 2007-08

Bench: Shri N.V.Vasudevan & Shri Waseem Ahmed

Section 10(34)Section 115JSection 143(3)Section 14ASection 234B

…book profit u/s. 115JB of the Act. 43. Aggrieved, assessee preferred an appeal before Ld. CIT(A) whereas assessee submitted that the provision of leave encashment is representing the ascertained liability and relied in the case of Bharat Earth Movers vs. CIT 245 ITR 428 (SC). Assessee also submitted that in the immediate preceding assessment year 2005-06 Ld. CIT(A) allowed the issue in favour of assessee. After considering the same, Ld. CIT(A) reversed the order of AO by observing as under:- “(17) I have considered the submission of the appellant and perused the assessment order. I have also gone through the ord…

M/S. Imc Ltd., Kolkata vs. DCIT, Circle - 11, Kolkata

Appeal is dismissed

ITA 813/KOL/2009[2005-06]Status: DisposedITAT Kolkata18 Jan 2017AY 2005-06

Bench: Shri N.V.Vasudevan & Shri Waseem Ahmed

Section 10(34)Section 115JSection 143(3)Section 14ASection 234B

…book profit u/s. 115JB of the Act. 43. Aggrieved, assessee preferred an appeal before Ld. CIT(A) whereas assessee submitted that the provision of leave encashment is representing the ascertained liability and relied in the case of Bharat Earth Movers vs. CIT 245 ITR 428 (SC). Assessee also submitted that in the immediate preceding assessment year 2005-06 Ld. CIT(A) allowed the issue in favour of assessee. After considering the same, Ld. CIT(A) reversed the order of AO by observing as under:- “(17) I have considered the submission of the appellant and perused the assessment order. I have also gone through the ord…

DCIT, Circle - 11, Kolkata vs. M/S. Imc Ltd., Kolkata

Appeal is dismissed

ITA 781/KOL/2009[2005-06]Status: DisposedITAT Kolkata18 Jan 2017AY 2005-06

Bench: Shri N.V.Vasudevan & Shri Waseem Ahmed

Section 10(34)Section 115JSection 143(3)Section 14ASection 234B

…book profit u/s. 115JB of the Act. 43. Aggrieved, assessee preferred an appeal before Ld. CIT(A) whereas assessee submitted that the provision of leave encashment is representing the ascertained liability and relied in the case of Bharat Earth Movers vs. CIT 245 ITR 428 (SC). Assessee also submitted that in the immediate preceding assessment year 2005-06 Ld. CIT(A) allowed the issue in favour of assessee. After considering the same, Ld. CIT(A) reversed the order of AO by observing as under:- “(17) I have considered the submission of the appellant and perused the assessment order. I have also gone through the ord…

Global E Business Operations Private Limited, Bangalore vs. DCIT, Bangalore

In the result, appeal of the assessee is allowed /treated as allowed

ITA 1092/BANG/2011[2007-08]Status: DisposedITAT Bangalore16 Jan 2017AY 2007-08

Bench: Shri. Sunil Kumar Yadav

For Appellant: Shri. Sharath Rao, CAFor Respondent: Shri. G. R. Reddy, CIT –DR-I
Section 10ASection 43B

…n a challenge was made before the Hon’ble Calcutta High Court in Exide Industries Ltd and another v. UOI & others, it struck down section 43B(f) being arbitrary, unconscionable and dehors the Apex Court decision in the case of Bharath Earth Movers Ltd (2000) 245 ITR 428 as the amendment did not disclose the reasons which would be consistent with the provisions of the Constitution and the laws of the land and not for the sole object of nullifying the apex Court decision. On SLP in 22889/2008, the SC on 08.05.2009 held that “Pending hearing and final disposal of the Civil Appeal, Department is restrained from r…

The West Coast Paper Mills Ltd, Mumbai vs. Addl CIT 1(3), Mumbai

Appeal stands allowed for Statistical Purposes

ITA 1965/MUM/2015[2010-11]Status: DisposedITAT Mumbai06 Jan 2017AY 2010-11
For Appellant: Shri Vijay Mehta -ARFor Respondent: Ms. Sunita Billa-DR
Section 14ASection 254(1)Section 80Section 80I

…td. (292ITR470), wherein it was held that insertion of clauses in section 43B and restricting the deduction in leave encashment, which was otherwise a trading liability was arbitrary and de hors. Hon'ble Supreme Court judgment in the case Bharat Earth Movers (245 ITR 428 ) 7.1 After considering the submission of the assessee the AO held that the expenditure was in the nature of provisions, that the same could not be allowed, that his predecessors had taken identical view in earlier years.Finally, he disallowed an amount of Rs.22,68,117/-, invoking the provisions of section 43B of the Act. 7.2During the appellate…

M/S. Religare Commodities Ltd., New Delhi vs. ACIT, New Delhi

In the result the disallowance made by the Ld

ITA 2283/DEL/2013[2008-09]Status: DisposedITAT Delhi04 Jan 2017AY 2008-09

Bench: Ms Suchitra Kamble & Shri Prashant Maharishireligare Commodities Ltd, Acit, D3, P3B, District Centre, Saket, Circle-15(1), Vs. New Delhi New Delhi Pan:Aaacf8356R (Appellant) (Respondent) Religare Commodities Ltd, Dcit, D3, P3B, District Centre, Saket, Circle-15(1), Vs. New Delhi New Delhi Pan:Aaacf8356R (Appellant) (Respondent)

For Appellant: Sh. Ajay Vohra, Sr. AdvFor Respondent: Sh. FR Meena, Sr. DR
Section 28Section 36(1)(ii)Section 37(1)

…the end of the fourth year when the options are exercised by the employees. Now the question arises as to whether the liability at the end of each year can be construed as a contingent one? 9.3.3 The Hon'ble Supreme Court in Bharat Earth Movers v. CIT [2000] 245 ITR 428/112 Taxman 61 dealt with the deductibility or otherwise of provision for liability towards encashment of earned leave. In that case, the company floated beneficial scheme for its employees for encashment of leave. The earned leave could be accumulated up to certain days. The assessee created provision of Rs. 62.25 lakh for encashment of accrued l…

ACIT 3(2), Mumbai vs. Mangalore Refinery & Petrochemicals Ltd, Mumbai

In the result, the Cross objection filed by the assessee is allowed, as above

ITA 6835/MUM/2008[2004-2005]Status: DisposedITAT Mumbai23 Nov 2016AY 2004-2005

Bench: Shri G.S. Pannu & Shri Amit Shukla: (A.Y : 2004-05)

For Appellant: Shri S.E. Dastor & Shri Niraj ShethFor Respondent: Shri G.M. Doss
Section 115JSection 143(3)Section 40A(9)Section 43B

…ility of Customs duty and its payment. Before us, the learned representative for the assessee had justifiably placed reliance on the judgments of the Hon'ble Supreme Court in the case of Metal Box Company of India Ltd., 73 ITR 53 (SC) and Bharat Earth Movers, 245 ITR 428 (SC) to emphasise that the point of arisal of a liability is not the same as the point of time prescribed for its payment. Notably, in the present case, assessee, at the time of obtaining clearance of raw material without payment of duty complied with the conditions prescribed by the Customs Department by furnishing a Bond to the Customs authorit…

M/S. Hindustan Petroleum Corporation Ltd., Mumbai vs. Addl. CIT. RG. - 1(1), Mumbai

In the result, appeal of the Revenue is dismissed

ITA 2736/MUM/2007[2003-2004]Status: DisposedITAT Mumbai23 Nov 2016AY 2003-2004

Bench: Shri R.C. Sharma & Shri Pawan Singh

For Respondent: Shri Rahul Raman, (CIT-DR)
Section 14ASection 253Section 32(1)(ii)Section 35Section 35ASection 36(1)(iii)Section 37(1)Section 80MSection 86

…rt of the contracts and the liability gets attached, the moment a service contract is signed; inducting a new employee. The argument of Senior Counsel is, therefore, well founded. We shall also, refer to the case of Bharat Earth Movers Ltd. vs CIT reported in 245 ITR 428, wherein the Hon'ble Supreme Court has held that leave encashment is not a contingent liability. Taking the same cue, that post retirement medical benefit is also a liability which gets attached to the company the moment, the service contract is signed, we hold that the revenue authorities erred in disallowing the provision under this head. Havin…

M/S. Pearl Polymers Ltd., New Delhi vs. DCIT, New Delhi

In the result, appeal of the assessee is allowed partly for statistical purpose

ITA 6165/DEL/2013[2009-10]Status: DisposedITAT Delhi18 Nov 2016AY 2009-10

Bench: Sh. H.S. Sidhu & Sh. O.P. Kantassessment Year: 2009-10 Vs. Deputy M/S. Pearl Polymers Ltd., 204, Commissioner Of Rohit House, 3, Tolstoy Marg, Income Tax, Circle-14(1), New New Delhi Delhi Pan : Aaacp0182F (Appellant) (Respondent) Appellant By Sh. R.K. Kapoor, Ca Respondent By Sh. F.R. Meena, Sr.Dr Date Of Hearing 24.08.2016 Date Of Pronouncement 18.11.2016 Order Per O.P. Kant, A.M.: This Appeal By The Assessee Is Directed Against Order Dated 23/09/2013 Passed By The Learned Commissioner Of Income Tax (Appeals)-Xvii, Laxmi Nagar, Delhi For Assessment Year 2009-10 Raising Following Grounds: “1.0 That The Learned Cit(A) Has Grossly Erred In Law & On Facts & In The Circumstances Of The Appellant’S Case In Confirming The Disallowance Of Rs.4.45.076/- U/S.40A(3Ijof The Income-Tax Act, On Wholly Untenable Grounds. 1.1 That The Learned Cit(A) Has Failed To Appreciate The Circumstances Under Which The Cash Payment Exceeding The Prescribed Limit U/S.40A(3) Had To Be Made By The Assessee, Although The Payees Were Fully Identified & Even Tds Has Been Made. 1.2 That The Disallowance Made U/S.40A(3) Is Bad In Law.

Section 115Section 115JSection 143(2)Section 143(3)Section 14ASection 40ASection 40A(3)

…abilities are allowed under the normal provisions of Income Tax Act only on payment basis. In this connection, the learned Authorized Representative further submitted that in the judgment of the Hon’ble Supreme Court in the case of Bharat Earth Movers Vs. CIT 245 ITR 428, it is held that provision for leave encashment represented ascertained liability. He further submitted that in the case of Apollo Tyres Ltd. Vs. CIT 255 ITR 273, the Hon’ble Supreme Court held that MAT provisions are a complete code in itself and the book profits as approved by the board of directors is required to be adopted for the purpose of…

Mercury Car Rentals Limited, Kolkata vs. D.C.I.T., Circle-4, Kolkata

In the result, the appeal filed by the assessee is allowed for statistical purpose as stated above

ITA 2696/KOL/2013[2007-2008]Status: DisposedITAT Kolkata31 Oct 2016AY 2007-2008

Bench: Shri M.Balaganesh & Shri S.S. Viswanethra Ravi

Section 43B

…acturial valuation and the same was claimed as deduction by relying on the decision of the Hon’ble Calcutta High Court in assesese’s own case reported in 292 ITR 470 and the decision of the Hon’ble Supreme Court in the case of Bharat Earth Movers reported in 245 ITR 428. The Assessing Officer, however, disallowed the claim of the assessee for provision of leave encashment relying on the Clause (f) inserted in Section 43B by the Finance Act, 2001 w.e.f. 1st April, 2002. The ld. CIT(Appeals) confirmed the said disallowance. The assessee challenged the constitutional validity of Clause (f) inserted in Section 43B b…

Hero Motocorp Limited, New Delhi vs. JCIT, New Delhi

In the result appeal of the assessee in ITA No

ITA 1545/DEL/2015[2010-11]Status: DisposedITAT Delhi24 Oct 2016AY 2010-11

Bench: Sh. I. C. Sudhir & Shri Prashant Maharishihero Motocorp Limited, Jcit, 34, Basant Lok, Vasant Range-1, New Delhi Vs. Vihar, New Delhi Pan: Aaach0812J (Appellant) (Respondent) Dcit, M/S. Hero Moto Corp. Circle-11(1), Ltd., 34, Community Vs. New Delhi Centre, Basant Lok, Vasant Vihar, New Delhi-110057 (Appellant) (Respondent) Dcit, M/S. Hero Moto Corp. Circle-11(1), Ltd., 34, Community

For Appellant: Sh. Ajay Vohra, Sr. AdvFor Respondent: Sh. NC Sawain, CIT DR
Section 143Section 143(3)Section 144CSection 92C

…eeds to be provided in the books, provided the same is capable of being estimated with reasonable certainty, even if the liability is quantified and discharged at a future date. He relied on the decision of Hon‘ble Supreme Court in Bharat Earth Movers v. CIT: 245 ITR 428 (SC) and decision of Hon‘ble Madras High Court in CIT v. Armour Consultants (P.) Ltd. 214 Taxman 444 (Mad.) and decision of the coordinate bench; Bayer Bio Science (P) Ltd.: 148 TTJ 73 (Mum.). The said method of accounting being Hero MotoCorp Limited Vs. JCIT & DCIT Vs. Hero MotoCorp Ltd. ITA Nos. 1545/Del/2015 and 2424/Del/2015 (AY 2010-11) ITA…

Allahabad Bank, Kolkata vs. The PCIT, Kolkata-2, Kolkata

In the result, the appeal filed by the assessee is allowed for statistical purposes

ITA 730/KOL/2015[2010-2011]Status: DisposedITAT Kolkata19 Oct 2016AY 2010-2011
Section 143(3)Section 263

…n for such liability was required to be taken into account for arriving at the commercial profit. In arriving at this conclusion, the Tribunal relied on the decision of the Hon’ble Supreme Court in the case of Bharat Earth Movers Limited –vs.- CIT reported in 245 ITR 428, wherein it was held by the Hon’ble Apex Court that if a business liability has definitely arisen in the accounting year, the deduction should be allowed, although the liability may have to be quantified and discharged at a future date. It was held that what should be certain is the incurring of the liability which should be capable of being esti…

Exide Industries Ltd., Kolkata vs. D.C.I.T Cir - 1, Kolkata.

In the result, the appeal of the assessee is partly allowed as indicated above

ITA 712/KOL/2013[2008-2009]Status: DisposedITAT Kolkata19 Oct 2016AY 2008-2009

Bench: Shri M.Balaganesh & Shri S.S. Viswanethra Ravi

Section 43BSection 43D

…acturial valuation and the same was claimed as deduction by relying on the decision of the Hon’ble Calcutta High Court in assesese’s own case reported in 292 ITR 470 and the decision of the Hon’ble Supreme Court in the case of Bharat Earth Movers reported in 245 ITR 428. The Assessing Officer, however, disallowed the claim of the assessee for provision of leave encashment relying on the Clause (f) inserted in Section 43B by the Finance Act, 2001 w.e.f. 1s t April, 2002. The ld. CIT(Appeals) confirmed the said disallowance. The assesese challenged the constitutional validity of Clause (f) inserted in Section 43B…

DCIT 8(1), Mumbai vs. Aptech Ltd, Mumbai

The appeal of the revenue is dismissed

ITA 2003/MUM/2014[2009-10]Status: DisposedITAT Mumbai06 Oct 2016AY 2009-10

Bench: Hon’Ble S/Shri Joginder Singh (Jm) & Rajesh Kumar,(Am) आमकय अऩीर सं./I.T.A. No.946 & 723/Mum/2013 (ननधधायण वषा / Assessment Year :2007-08 & 2008-09)

For Appellant: Shri S C Tiwari and Rutuja N
Section 14ASection 40

…he claim of the assessee by allowing the relief to the extent of Rs.21,17,905/- being actual payment of leave encashment by rejecting the submissions of the assessee that the decision of the Hon’ble Supreme Court in the case of Bharat Earth Movers reported in 245 ITR 428 by observing that the said judgment covers the case of the assessee; that the amount provided by the assessee in respect of future liability would be allowable ITA No . 946 -723 -200 03-1 227- 1271-1 228- AP TEC H 25 subject to the fulfillment of certain conditions which the assessee has not satisfied and therefore the provisions were sustained…

Aptech Ltd, Mumbai vs. DCIT 8(1), Mumbai

The appeal of the revenue is dismissed

ITA 1271/MUM/2014[2009-10]Status: DisposedITAT Mumbai06 Oct 2016AY 2009-10

Bench: Hon’Ble S/Shri Joginder Singh (Jm) & Rajesh Kumar,(Am) आमकय अऩीर सं./I.T.A. No.946 & 723/Mum/2013 (ननधधायण वषा / Assessment Year :2007-08 & 2008-09)

For Appellant: Shri S C Tiwari and Rutuja N
Section 14ASection 40

…he claim of the assessee by allowing the relief to the extent of Rs.21,17,905/- being actual payment of leave encashment by rejecting the submissions of the assessee that the decision of the Hon’ble Supreme Court in the case of Bharat Earth Movers reported in 245 ITR 428 by observing that the said judgment covers the case of the assessee; that the amount provided by the assessee in respect of future liability would be allowable ITA No . 946 -723 -200 03-1 227- 1271-1 228- AP TEC H 25 subject to the fulfillment of certain conditions which the assessee has not satisfied and therefore the provisions were sustained…

Aptech Ltd, Mumbai vs. DCIT 8(1), Mumbai

The appeal of the revenue is dismissed

ITA 946/MUM/2013[2007-08]Status: DisposedITAT Mumbai06 Oct 2016AY 2007-08

Bench: Hon’Ble S/Shri Joginder Singh (Jm) & Rajesh Kumar,(Am) आमकय अऩीर सं./I.T.A. No.946 & 723/Mum/2013 (ननधधायण वषा / Assessment Year :2007-08 & 2008-09)

For Appellant: Shri S C Tiwari and Rutuja N
Section 14ASection 40

…he claim of the assessee by allowing the relief to the extent of Rs.21,17,905/- being actual payment of leave encashment by rejecting the submissions of the assessee that the decision of the Hon’ble Supreme Court in the case of Bharat Earth Movers reported in 245 ITR 428 by observing that the said judgment covers the case of the assessee; that the amount provided by the assessee in respect of future liability would be allowable ITA No . 946 -723 -200 03-1 227- 1271-1 228- AP TEC H 25 subject to the fulfillment of certain conditions which the assessee has not satisfied and therefore the provisions were sustained…

Aptech Ltd, Mumbai vs. DCIT 8(1), Mumbai

The appeal of the revenue is dismissed

ITA 723/MUM/2013[2008--09]Status: DisposedITAT Mumbai06 Oct 2016

Bench: Hon’Ble S/Shri Joginder Singh (Jm) & Rajesh Kumar,(Am) आमकय अऩीर सं./I.T.A. No.946 & 723/Mum/2013 (ननधधायण वषा / Assessment Year :2007-08 & 2008-09)

For Appellant: Shri S C Tiwari and Rutuja N
Section 14ASection 40

…he claim of the assessee by allowing the relief to the extent of Rs.21,17,905/- being actual payment of leave encashment by rejecting the submissions of the assessee that the decision of the Hon’ble Supreme Court in the case of Bharat Earth Movers reported in 245 ITR 428 by observing that the said judgment covers the case of the assessee; that the amount provided by the assessee in respect of future liability would be allowable ITA No . 946 -723 -200 03-1 227- 1271-1 228- AP TEC H 25 subject to the fulfillment of certain conditions which the assessee has not satisfied and therefore the provisions were sustained…

DCIT 8(1), Mumbai vs. Apatech Ltd, Mumbai

The appeal of the revenue is dismissed

ITA 1228/MUM/2013[2008-09]Status: DisposedITAT Mumbai06 Oct 2016AY 2008-09

Bench: Hon’Ble S/Shri Joginder Singh (Jm) & Rajesh Kumar,(Am) आमकय अऩीर सं./I.T.A. No.946 & 723/Mum/2013 (ननधधायण वषा / Assessment Year :2007-08 & 2008-09)

For Appellant: Shri S C Tiwari and Rutuja N
Section 14ASection 40

…he claim of the assessee by allowing the relief to the extent of Rs.21,17,905/- being actual payment of leave encashment by rejecting the submissions of the assessee that the decision of the Hon’ble Supreme Court in the case of Bharat Earth Movers reported in 245 ITR 428 by observing that the said judgment covers the case of the assessee; that the amount provided by the assessee in respect of future liability would be allowable ITA No . 946 -723 -200 03-1 227- 1271-1 228- AP TEC H 25 subject to the fulfillment of certain conditions which the assessee has not satisfied and therefore the provisions were sustained…