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 367,154 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

M/S Aggarwal & Modi Enterprises vs. Commissioner of Income Tax

ITA - 1274 / 2009HC Delhi21 Jan 2016

…T (1971)82 ITR 363 (SC), J.K. Synthetics Limited v. O.S. Bajpai, ITO (1976) 105 ITR 864 (All), Swadeshi Cotton Mill Co. Ltd. v. CIT (1980) 125 ITR 33 (All), Union of India v. J.K. Synthetics Ltd. (1993) 199 ITR 14 (SC) and Bharat Earth Movers v. CIT (2000) 245 ITR 428 (SC). A reference was also made to the decisions in Calcutta Co. Ltd. v. Commissioner of Income Tax, West Bengal (1959) 37 ITR 1(SC), CIT v. S.P. Jaiswal Estates (P) Ltd. (1995) 214 ITR 448 (Cal) and CIT v. Dalmia Dairy Industries Ltd. (1991) 189 ITR 167 (Del). 35. Mr. Aggarwal also stressed on the principle of consistency and pointed out…

M/S Aggarwal & Modi Enterprises vs. The Commissioner of Income Tax

ITA - 354 / 2003HC Delhi21 Jan 2016

…T (1971)82 ITR 363 (SC), J.K. Synthetics Limited v. O.S. Bajpai, ITO (1976) 105 ITR 864 (All), Swadeshi Cotton Mill Co. Ltd. v. CIT (1980) 125 ITR 33 (All), Union of India v. J.K. Synthetics Ltd. (1993) 199 ITR 14 (SC) and Bharat Earth Movers v. CIT (2000) 245 ITR 428 (SC). A reference was also made to the decisions in Calcutta Co. Ltd. v. Commissioner of Income Tax, West Bengal (1959) 37 ITR 1(SC), CIT v. S.P. Jaiswal Estates (P) Ltd. (1995) 214 ITR 448 (Cal) and CIT v. Dalmia Dairy Industries Ltd. (1991) 189 ITR 167 (Del). 35. Mr. Aggarwal also stressed on the principle of consistency and pointed out…

M/S Aggarwal & Modi Enterprise vs. The Commissioner of Income Tax

ITA - 355 / 2003HC Delhi21 Jan 2016

…T (1971)82 ITR 363 (SC), J.K. Synthetics Limited v. O.S. Bajpai, ITO (1976) 105 ITR 864 (All), Swadeshi Cotton Mill Co. Ltd. v. CIT (1980) 125 ITR 33 (All), Union of India v. J.K. Synthetics Ltd. (1993) 199 ITR 14 (SC) and Bharat Earth Movers v. CIT (2000) 245 ITR 428 (SC). A reference was also made to the decisions in Calcutta Co. Ltd. v. Commissioner of Income Tax, West Bengal (1959) 37 ITR 1(SC), CIT v. S.P. Jaiswal Estates (P) Ltd. (1995) 214 ITR 448 (Cal) and CIT v. Dalmia Dairy Industries Ltd. (1991) 189 ITR 167 (Del). 35. Mr. Aggarwal also stressed on the principle of consistency and pointed out…

M/S Aggarwal & Modi Enterprise vs. Commissioner of Income Tax

ITA - 769 / 2006HC Delhi21 Jan 2016

…T (1971)82 ITR 363 (SC), J.K. Synthetics Limited v. O.S. Bajpai, ITO (1976) 105 ITR 864 (All), Swadeshi Cotton Mill Co. Ltd. v. CIT (1980) 125 ITR 33 (All), Union of India v. J.K. Synthetics Ltd. (1993) 199 ITR 14 (SC) and Bharat Earth Movers v. CIT (2000) 245 ITR 428 (SC). A reference was also made to the decisions in Calcutta Co. Ltd. v. Commissioner of Income Tax, West Bengal (1959) 37 ITR 1(SC), CIT v. S.P. Jaiswal Estates (P) Ltd. (1995) 214 ITR 448 (Cal) and CIT v. Dalmia Dairy Industries Ltd. (1991) 189 ITR 167 (Del). 35. Mr. Aggarwal also stressed on the principle of consistency and pointed out…

Aggarwal & Modi Enterprises Pv vs. C.I.T

ITA - 770 / 2006HC Delhi21 Jan 2016

…T (1971)82 ITR 363 (SC), J.K. Synthetics Limited v. O.S. Bajpai, ITO (1976) 105 ITR 864 (All), Swadeshi Cotton Mill Co. Ltd. v. CIT (1980) 125 ITR 33 (All), Union of India v. J.K. Synthetics Ltd. (1993) 199 ITR 14 (SC) and Bharat Earth Movers v. CIT (2000) 245 ITR 428 (SC). A reference was also made to the decisions in Calcutta Co. Ltd. v. Commissioner of Income Tax, West Bengal (1959) 37 ITR 1(SC), CIT v. S.P. Jaiswal Estates (P) Ltd. (1995) 214 ITR 448 (Cal) and CIT v. Dalmia Dairy Industries Ltd. (1991) 189 ITR 167 (Del). 35. Mr. Aggarwal also stressed on the principle of consistency and pointed out…

M/S Aggarwal & Modi Enterprise vs. Commissioner of Income Tax

ITA - 876 / 2006HC Delhi21 Jan 2016

…T (1971)82 ITR 363 (SC), J.K. Synthetics Limited v. O.S. Bajpai, ITO (1976) 105 ITR 864 (All), Swadeshi Cotton Mill Co. Ltd. v. CIT (1980) 125 ITR 33 (All), Union of India v. J.K. Synthetics Ltd. (1993) 199 ITR 14 (SC) and Bharat Earth Movers v. CIT (2000) 245 ITR 428 (SC). A reference was also made to the decisions in Calcutta Co. Ltd. v. Commissioner of Income Tax, West Bengal (1959) 37 ITR 1(SC), CIT v. S.P. Jaiswal Estates (P) Ltd. (1995) 214 ITR 448 (Cal) and CIT v. Dalmia Dairy Industries Ltd. (1991) 189 ITR 167 (Del). 35. Mr. Aggarwal also stressed on the principle of consistency and pointed out…

Aggarwal & Modi Enterpises Co vs. Commissioner of Income Tax

ITA - 1123 / 2007HC Delhi21 Jan 2016

…T (1971)82 ITR 363 (SC), J.K. Synthetics Limited v. O.S. Bajpai, ITO (1976) 105 ITR 864 (All), Swadeshi Cotton Mill Co. Ltd. v. CIT (1980) 125 ITR 33 (All), Union of India v. J.K. Synthetics Ltd. (1993) 199 ITR 14 (SC) and Bharat Earth Movers v. CIT (2000) 245 ITR 428 (SC). A reference was also made to the decisions in Calcutta Co. Ltd. v. Commissioner of Income Tax, West Bengal (1959) 37 ITR 1(SC), CIT v. S.P. Jaiswal Estates (P) Ltd. (1995) 214 ITR 448 (Cal) and CIT v. Dalmia Dairy Industries Ltd. (1991) 189 ITR 167 (Del). 35. Mr. Aggarwal also stressed on the principle of consistency and pointed out…

M/S Aggarwal & Modi Enterprises Pvt Ltd vs. Commissioner of Income Tax

ITA - 1273 / 2009HC Delhi21 Jan 2016

…T (1971)82 ITR 363 (SC), J.K. Synthetics Limited v. O.S. Bajpai, ITO (1976) 105 ITR 864 (All), Swadeshi Cotton Mill Co. Ltd. v. CIT (1980) 125 ITR 33 (All), Union of India v. J.K. Synthetics Ltd. (1993) 199 ITR 14 (SC) and Bharat Earth Movers v. CIT (2000) 245 ITR 428 (SC). A reference was also made to the decisions in Calcutta Co. Ltd. v. Commissioner of Income Tax, West Bengal (1959) 37 ITR 1(SC), CIT v. S.P. Jaiswal Estates (P) Ltd. (1995) 214 ITR 448 (Cal) and CIT v. Dalmia Dairy Industries Ltd. (1991) 189 ITR 167 (Del). 35. Mr. Aggarwal also stressed on the principle of consistency and pointed out…

M/S Aggarwal & Modi Enterprises vs. Commissioner of Income Tax

ITA - 1277 / 2009HC Delhi21 Jan 2016

…T (1971)82 ITR 363 (SC), J.K. Synthetics Limited v. O.S. Bajpai, ITO (1976) 105 ITR 864 (All), Swadeshi Cotton Mill Co. Ltd. v. CIT (1980) 125 ITR 33 (All), Union of India v. J.K. Synthetics Ltd. (1993) 199 ITR 14 (SC) and Bharat Earth Movers v. CIT (2000) 245 ITR 428 (SC). A reference was also made to the decisions in Calcutta Co. Ltd. v. Commissioner of Income Tax, West Bengal (1959) 37 ITR 1(SC), CIT v. S.P. Jaiswal Estates (P) Ltd. (1995) 214 ITR 448 (Cal) and CIT v. Dalmia Dairy Industries Ltd. (1991) 189 ITR 167 (Del). 35. Mr. Aggarwal also stressed on the principle of consistency and pointed out…

Exide Industries Limited, Kolkata vs. Addl. CIT, Range - 1, Kolkata

In the result, the appeal of the assessee for A

ITA 189/KOL/2007[2003-04]Status: DisposedITAT Kolkata20 Jan 2016AY 2003-04

Bench: Shri P.M. Jagtap & Shri S.S. Viswanethra Ravi

Section 40Section 90(2)

…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 assesese challenged the constitutional validity of Clause (f) inserted in Section 43B b…

M/S the Mysore Electrical Industries Ltd., Bangalore vs. CIT, Bangalore

In the result, the appeal filed by the assessee is partly allowed

ITA 565/BANG/2014[2007-08]Status: DisposedITAT Bangalore08 Jan 2016AY 2007-08

Bench: Shri N.V.Vasudevan & Shri Inturi Rama Rao

For Appellant: Shri Gurunathan, AdvocateFor Respondent: Mrs Neera Malhotra, CIT
Section 143(3)Section 147Section 148Section 263

…(2011) Delhi HC d. Prakash Leasing Ltd. Vs DCIT 208 Taxman 0464(2012) Kar.HC. e. Oil and Natural Gas Corpn.Ltd Vs CIT 332 ITR 0180 (2010) SC f. CIT Vs Triveni Engineering & Industries Ltd. 336 ITR 0374 (2011) Delhi. HC g. Bharath Earth Movers Ltd Vs CIT 245 ITR 428 (2000) SC h. CIT Vs Ansal Housing Finance and Leasing Co. Ltd. and others 354 ITR 180 (2013)-Delhi HC i. CIT Vs Ansal Properties and Ind.Ltd.352 ITR 637 (2000) DHC 5. The learned CIT brushing aside the explanation offered by the assessee company had held that provision of Rs.99,80,000/- is a contingent liability as it is not ascertainable an…

DCIT, Circle - 7, Kolkata vs. M/S. Bch Electric Ltd., Kolkata

In the result, both appeals of revenue are dismissed

ITA 1538/KOL/2011[2007-08]Status: DisposedITAT Kolkata18 Dec 2015AY 2007-08

Bench: Shri Mahavir Singh, Jm & Shri M. Balaganesh, Am]

For Appellant: Shri Rajendra Prasad, JCIT, Sr. DRFor Respondent: Shri R. N. Bajoria, Sr. Advocate
Section 143(3)

…the gratuity scheme would be entitled to deduction out of the gross receipts for the accounting year during which the provision is made for the liability. The same principle is laid down in the judgment of this court in the case of Bharat Earth Movers [2000] 245 ITR 428. In that case, the assessee-company had formulated leave encashment scheme. It was held, following the judgment in Metal Box Company of India [1969] 73 ITR 53 (SC), that the provision made by the assessee for meeting the liability incurred under the leave encashment scheme proportionate with the entitlement earned by the employees, was entitled t…

DCIT, Circle - 7, Kolkata vs. M/S. Bch Electric Ltd., Kolkata

In the result, both appeals of revenue are dismissed

ITA 1537/KOL/2011[2006-07]Status: DisposedITAT Kolkata18 Dec 2015AY 2006-07

Bench: Shri Mahavir Singh, Jm & Shri M. Balaganesh, Am]

For Appellant: Shri Rajendra Prasad, JCIT, Sr. DRFor Respondent: Shri R. N. Bajoria, Sr. Advocate
Section 143(3)

…the gratuity scheme would be entitled to deduction out of the gross receipts for the accounting year during which the provision is made for the liability. The same principle is laid down in the judgment of this court in the case of Bharat Earth Movers [2000] 245 ITR 428. In that case, the assessee-company had formulated leave encashment scheme. It was held, following the judgment in Metal Box Company of India [1969] 73 ITR 53 (SC), that the provision made by the assessee for meeting the liability incurred under the leave encashment scheme proportionate with the entitlement earned by the employees, was entitled t…

M/S. Snowhite Stores Pvt. Ltd., New Delhi vs. ACIT, New Delhi

In the result, the appeal of the assessee stands allowed

ITA 5770/DEL/2013[2002-03]Status: DisposedITAT Delhi11 Dec 2015AY 2002-03

Bench: Shri N.K. Saini & Shri A.T. Varkey

For Appellant: S/Shri Pradeep Dinodia & R.K. Kapoor, AdvocatesFor Respondent: Shri K.K. Jaiswal, Senior DR
Section 143(3)Section 271(1)(c)Section 43B

…he earlier years; and it was only from AY 2002-03 that such provision was subject to provision of section 43B(f) of the Act. In this regard, he made a specific reference to the decision of the Hon'ble Supreme Court in the case of Bharat Earthmovers vs. CIT - 245 ITR 428 to claim that the disallowance itself was bad and, therefore, no penalty should have been levied on the same. He further mentioned that Hon'ble Calcutta High Court in the case of Exide Industries Ltd. vs. Union of India, 292 ITR 470, has held that the amendment to section 43B(f) is unconstitutional and the Hon'ble High Court has held that provi…

Addl Cirt G 3(2), Mumbai vs. Aditya Birla Nuvo Ltd, Mumbai

Appeal of the assessee is partly allowed

ITA 3178/MUM/2012[2008-09]Status: DisposedITAT Mumbai09 Dec 2015AY 2008-09
For Appellant: Shri J.D. MistriFor Respondent: Shri E. Sankaran-CIT(DR)
Section 143(3)Section 145Section 14ASection 254(1)

…igns or retired from the services.We also find that the Hon’ble Calcutta High Court in the case of Excide Industries Ltd. (supra) has struck down Sec. 43B(f) being arbitrary, unconscionable and dehors the Apex Court decision in the case of Bharat Earth Movers 245 ITR 428. It is relevant to state that the Tribunal in the case of CIT Vs Universal Medicare in ITA No. 6191/M/08, has followed the decision of the Hon’ble Supreme Court in the case of Bharat Earth Movers and directed the AO to allow the amounts so claimed. Respectfully following the afore discussed decisions, we direct the AO to allow the claim of provis…

Metro Dairy Ltd, Kolkata vs. D.C.I.T Cir - 7, Kolkata

In the result, the appeal of the assessee is part allowed for statistical purposes

ITA 731/KOL/2013[2009-10]Status: DisposedITAT Kolkata04 Dec 2015AY 2009-10

Bench: : Shri M. Balaganeshita No. 731/Kol/2013 A.Y 2009-10 M/S. Metro Dairy Ltd Vs. D.C.I.T, Circle-7, Kolkata Pan: Aabcm 8352K Pan: Aaccm 0685L (Appellant) (Respondent)

For Appellant: None appearedFor Respondent: Smt. Ranu Biswas, JCIT, ld.DR
Section 143(3)Section 43B

…be discharged by the assessee as leave encashment at the time of retirement of the concerned empoyees. The assessee claimed the same as deduction by placing reliance on the decision of the Hon’ble Apex Court in the case of Bharat Earth Movers Ltd reported in 245 ITR 428 (SC). The Learned AO disallowed the same in terms of section 43B(f) of the Act as the same is allowable as deduction only on payment. On first appeal, the Learned CITA upheld the action of the Learned AO. 4. When the case was called for, none appeared for the assessee. We have heard the Learned DR. We find that the issue under appeal is consider…

Ici India Ltd., Kolkata vs. DCIT, Cir-10, Kolkata

In the result, Revenue’s appeal is dismissed

ITA 850/KOL/2007[1996-97]Status: DisposedITAT Kolkata27 Nov 2015AY 1996-97

Bench: Shri Mahavir Singh & Shri Waseem Ahmed

Section 143(3)

…ision of the leave encashment. It is not a contingent liability because the employees are very much entitled for getting the leave encashed as per the policy of the company. We find from the judgment of Hon'ble Supreme Court in the case of Bharat Earth Movers 245 ITR 428 (SC) has allowed this kind of expenditure u/s 37(1) of the Act. The relevant extract of the order is produced below:- “Section 37(1) of the Income-tax Act, 1961 – Business expenditure – Year in which deductible – Assessment year 1978-79 – Whether if a business liability has definitely arisen in accounting year, deduction should be allowed althoug…

DCIT, Cir-10, Kolkata vs. M/S Ici India Ltd., Kolkata

In the result, Revenue’s appeal is dismissed

ITA 1021/KOL/2007[1996-97]Status: DisposedITAT Kolkata27 Nov 2015AY 1996-97

Bench: Shri Mahavir Singh & Shri Waseem Ahmed

Section 143(3)

…ision of the leave encashment. It is not a contingent liability because the employees are very much entitled for getting the leave encashed as per the policy of the company. We find from the judgment of Hon'ble Supreme Court in the case of Bharat Earth Movers 245 ITR 428 (SC) has allowed this kind of expenditure u/s 37(1) of the Act. The relevant extract of the order is produced below:- “Section 37(1) of the Income-tax Act, 1961 – Business expenditure – Year in which deductible – Assessment year 1978-79 – Whether if a business liability has definitely arisen in accounting year, deduction should be allowed althoug…

ACIT, Cir-10, Kolkata vs. M/S Ici India Ltd., Kolkata

In the result, Revenue’s appeal is dismissed

ITA 2355/KOL/2005[1996-97]Status: DisposedITAT Kolkata27 Nov 2015AY 1996-97

Bench: Shri Mahavir Singh & Shri Waseem Ahmed

Section 143(3)

…ision of the leave encashment. It is not a contingent liability because the employees are very much entitled for getting the leave encashed as per the policy of the company. We find from the judgment of Hon'ble Supreme Court in the case of Bharat Earth Movers 245 ITR 428 (SC) has allowed this kind of expenditure u/s 37(1) of the Act. The relevant extract of the order is produced below:- “Section 37(1) of the Income-tax Act, 1961 – Business expenditure – Year in which deductible – Assessment year 1978-79 – Whether if a business liability has definitely arisen in accounting year, deduction should be allowed althoug…

Aditya Birla Nuvo Ltd ( Formerly Known As Indian Rayon and Industries Ltd), Mumbai vs. Addl CIT RG 3(2), Mumbai

ITA 3703/MUM/2011[2007-08]Status: DisposedITAT Mumbai24 Nov 2015AY 2007-08
For Appellant: Shri J.D. MistriFor Respondent: Shri E. Sankaran-CIT(DR)
Section 143(3)Section 254(1)Section 43B

…igns or retired from the services.We also find that the Hon’ble Calcutta High Court in the case of Excide Industries Ltd. (supra) has struck down Sec. 43B(f) being arbitrary, unconscionable and dehors the Apex Court decision in the case of Bharat Earth Movers 245 ITR 428. It is relevant to state that the Tribunal in the case of CIT Vs Universal Medicare in ITA No. 6191/M/08, has followed the decision of the Hon’ble Supreme Court in the case of Bharat Earth Movers and directed the AO to allow the amounts so claimed. Respectfully following the afore discussed decisions, we direct the AO to allow the claim of provis…