D.C.I.T., CIRCLE 11.1, , KOLKATA V. SCHENCK PROCESS INDIA PRIVATE LIMITED, BANGALORE

ITA 19/KOL/2025

AI Insights

The case involves an appeal by the revenue against the order of the National Faceless Appeal Centre, which had allowed the appeal of Schenck Process India Private Limited by directing the AO to delete the addition made in respect of provisions for leave encashment. The Tribunal noted that the decision relied upon by the CIT(A) had been reversed by the Supreme Court, which held that no provision for leave encashment is to be allowed in the computation of income, and only the actual payment of leave encashment is to be allowed. The Tribunal decided to restore the issue to the AO for a fresh decision.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 772226 (ITAT-KOLKATA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Assessment Year: 2016-2017
• Other Referred Cases: Exide Industries Ltd. v. Union of India [2007] 292 ITR 470 (Cal.), Union of India v. Exide Industries Ltd. [2020] (Civil Appeal No. 3545 of 2009), (116 taxmann.com 378)
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S.B. CHAKRABORTHY
• Assessee Lawyers: ADITYA KEJRIWAL
• Section: 143(3)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, KOLKATA BEFORE SHRI RAJESH KUMAR, AM AND SHRI PRADIP KUMAR CHOUBEY, JM ITA No.19/KOL/2025 (Assessment Year:2016-17) DCIT Circle 11.1, Kolkata Aaykar Bhavan, 6th floor, P-7, Chowringhee Square Kolkata West Bengal, PIN-700069 Vs. Schenck Process India Private Limited No.3, 2nd Floor (Old No.18 and 23) Peenya Village, 3 rd Main road, KiadbPeenya Industrial Area YeshwanthpurHobli,Bangalore,Karnataka, PIN-560058 (Appellant) (Respondent) PAN No. AAECS4728C Assessee by : Shri Aditya Kejriwal, AR Revenue by : Shri S.B. Chakraborthy, DR Date of hearing: 21.05.2025 Date of pronouncement: 28.08.2025 O R D E R Per Rajesh Kumar, AM: This is an appeal preferred by the revenue against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 30.09.2024 for the AY 2016-17. 02. The appeal of the Revenue is time barred by 19 days. Considering the facts and circumstances of the case, we find that there are sufficient and plausible reasons to condone the delay and hence the delay of filing the appeal is hereby condoned. 03. This appeal was heard on 21st May, 2025 and the order ought to have been passed within 90 days as per Rule 35 of ITAT Rules 1963. The draft order was dictated and was prepared within 90 days from the date of hearing however could not be pronounced due to Hon’ble Printed from counselvise.com Page | 2 ITA No.19/KOL/2025 Schenck Process India private Limited; A.Y. 2016-17 Judicial Member, Shri Pradip Kumar Choubey being on leave from 18th August, 2025 to 22nd August, 2025. Therefore, this is being pronounced on 25th August, 2025. 04. The only issue raised by the Revenue is against the order of ld. CIT (A), allowing the appeal of the assessee by directing the AO to delete the addition made in respect of provisions for leave encashment allowable paid by the assessee during the instant year by relying on the decision of the Hon'ble Calcutta High Court in case of Exide Industries Ltd. v. Union of India [2007] 292 ITR 470 (Cal.), whereas the Supreme Court subsequently reversed the decision in Union of India v. Exide Industries Ltd. [2020] (Civil Appeal No. 3545 of 2009), (116 taxmann.com 378). 05. After hearing the rival contentions and perusing the materials available on record, we observe that in the assessment framed u/s 143(3) dated 21.08.2018, the ld. AO disallowed the provisions for leave encashment amounting to ₹77,06,605/-, while the ld. CIT (A) in the appellate order deleted the addition and now Revenue is challenged the order of the ld. CIT (A) that the decision of the Hon'ble Calcutta High Court in case of Exide Industries Ltd. Vs. Union of India (supra) has been reversed by the Hon'ble Supreme Court and as stated above, wherein it has been held that no provision for leave encashment is to be allowed in the computation of income and it is only the actual payment of leave encasement which is to be allowed. We further note that the assessee has paid ₹49,03,960/-, during the year in respect of liability which were existing on the first day of the previous year. Consequently, we deem it fit and proper to restore the issue to the file of the ld. AO to decide the issue afresh after affording reasonable opportunity of hearing to the assessee. Needless to say, that the provisions created for leave encashment during the year are Printed from counselvise.com Page | 3 ITA No.19/KOL/2025 Schenck Process India private Limited; A.Y. 2016-17 to be added back to the income of the assessee but actual payment made against the provisions is to be allowed as expense. 06. In the result, the appeal of the Revenue is allowed for statistical purposes. Order pronounced in the open court on 28.08.2025. Sd/- Sd/- (PRADIP KUMAR CHOUBEY) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated: 28.08.2025 Sudip Sarkar, Sr.PS Copy of the Order forwarded to: BY ORDER, True Copy// Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Kolkata 1. The Appellant 2. The Respondent 3. CIT 4. DR, ITAT, 5. Guard file. Printed from counselvise.com "