Metro Dairy Ltd., Kolkata V. DCIT, Circle -7, Kolkata, Kolkata

ITA 1016/KOL/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 99719 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 1 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2015
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 02-07-2012
• Court: TRIBUNAL
• Department Lawyers: DEBASISH ROYJCITSR
• Assessee Lawyers: ARIJIT CHAKRABORTY; BIKASH CHANDA
• Section: 143(3); 2; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH A KOLKATA [BEFORE HON BLE SHRI MAHAVIR SINGH, JM & SHRI M.BALAGANESH, AM ] ITA NO.1016 /KOL/2012 ASSESSMENT YEAR : 2008 - 09 METRO DAIRY LTD. - VERSUS - D .C.I.T., CIRCLE - 7, KOLKATA KOLKATA (PAN: AABCM 8352 K) (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI ARIJIT CHAKRABORTY & SHRI BIKASH CHANDA, FCA FOR THE RESPONDENT: SHRI DEBASISH ROY,JCIT,SR.DR DATE OF HEARING : 20.08.2015. DATE OF PRONOUNCEMENT : 31.08.2015. ORDER PER SHRI M.BALAGANESH, AM THIS APPEAL OF THE ASSESSEE ARISE S OUT OF THE ORDER OF LD. CIT(A) - VIII, KOLKATA IN APPEAL NO . 194 / CIT(A) - VIII / KOL/10 - 11 DATED 26.03 .2012 FOR A.Y.2008 - 09 AGAINST THE ORDER OF ASSESSMENT PASSED U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ). 2. THE FIRST ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD. CIT(A) IS CORRECT IN CONFIRMING THE DISALLOWANCE OF LEAVE ENCASHMENT AMOUNTING TO RS.10,24,128/ - IGNORING THE DECISION OF THE JURISDI CTIONAL HIGH COURT IN THE CASE OF EXIDE INDUSTRIES LIMITED REPORTED IN 292 ITR 470. 3. THE BRIEF FACTS OF THIS CASE ARE THAT THE ASSESSEE IS A WIDELY HELD DOMESTIC COMPANY, ENGAGED IN THE BUSINESS OF MANUFACTURE AND SALE OF DAIRY PRODUCTS AND SUPPLY OF FRESH MILK. DURING THE ASSESSMENT YEAR UNDER APPEAL, THE ASSESSEE MADE A PROVISION FOR LEAVE ENCASHMENT TO THE TUNE OF RS.10,24,128/ - ON THE BASIS OF ACTUARIAL VALUATION ON PR OJECTED UNIT CREDIT METHOD, IN ACCORDANCE WITH THE ACCOUNTING STANDARD ITA NO.1016/KOL/2012 METRO DAIRY LTD. A.Y.2008 - 09 2 15 (A S - 15) E MPL OYEES B ENEFITS ISSUED BY THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA (ICAI) AND CLAIMED THE SAME AS DEDUCTION BY RELYING ON THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF EXIDE INDUSTRIES LIMITED REPORTED IN 292 ITR 470 (CAL), THAT SUCH AMOUNT IS NOT SUBJECT TO THE PROVISION OF SECTION 43B(F) OF THE ACT. THE LD. AO DISALLOWED THE SAME ON THE GROUND THAT THE DECISION OF THE HON BLE CALCUTTA HIGH COURT IS CHALLENGED BY THE REVENUE BY WAY OF SPECIAL LEAVE PETITION IN SUPREME COURT . ON FIRST APPEAL, THE LD. CIT(A) UPHELD THE DISALLOWANCE MADE BY THE LD. AO ON THE GROUND THAT SINCE THE OPERATION OF THE ORDER OF HON BLE CALCUTTA HIGH COURT IN THE CASE OF EXIDE INDUSTRIES LIMITED HAS BEEN STAYED BY THE HON BLE SUPREME COURT AND ACCORD INGLY HELD THAT AS PER SECTION 43B(F) OF THE ACT , THE LEAVE ENCASHMENT CAN BE ALLOWED ONLY ON PAYMENT BASIS. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUNDS : - 1. THAT THE LD.CIT(A) ERRED IN FACTS AS WELL AS IN LAW BY CONFIRMING THE DISALLOWANCE OF LEAVE ENCASHMENT AMOUNTING TO RS.10,24,128/ - , WHICH WAS CLAIMED BY THE APPELLANT RELYING ON THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF EXIDE INDUSTRIES LIMITED REPORTED IN 292 ITR 470. 2. THAT THE HON BLE SUPREME COURT HAS ADMITTED THE REVENUE S APPEAL AGAINST THE ORDER IN THE CASE OF EXIDE INDUSTRIES LIMITED (SUPRA) BUT HAS ALLOWED THE ASSESSEE S TO CLAIM SUCH EXPENSE, THE LD. CIT(A) ERRED IN LAW IN CONFIRMING THE DISALLOWANCE OF SUCH CLAIM AGAINST THE PREVAILING DECIS ION OF THE JURISDICTIONAL HIGH COURT. 4. SHRI ARIJIT CHAKRABORTY AND SHRI BIKASH CHANDA, FCA, THE LD. ARS APPEARED ON BEHALF OF THE ASSESSEE AND SHRI DEBASISH ROY, JCIT, SR.DR, THE LD.DR APPEARED ON BEHALF OF THE REVENUE. 5. THE LD. AR ARGUED THAT SINCE THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF EXIDE INDUSTRIES LIMITED 292 ITR 470 HAS STRUCK DOWN THE PROVISION OF SECTION 43B(F) OF THE ACT , THE D EDUCTION MAY BE GRANTED TOWARDS LEAV E ENCASHMENT MADE ON PROVISION BASIS ITSELF I N LINE WITH THE DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF BHARAT EARTH MOVERS REPORTED IN 245 ITR 428 (SC). ITA NO.1016/KOL/2012 METRO DAIRY LTD. A.Y.2008 - 09 3 IN RESPONSE TO THIS, THE LD. DR VEHEMENTLY SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 6. WE HAVE HEARD THE RIVAL SUBMISSION S AND PERUSED THE CASE LAWS QUOTED BY THE LD. AR. WE FIND THAT IT IS RELEVANT TO GET INTO THE OPERATIVE PORTION OF THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF EXIDE INDUSTRIES LIMITED VS UNION OF INDIA REPORTED IN 292 ITR 470. IT WAS HELD AS BELOW : - 11. IN THIS REGARD THE OBSERVATION OF THE APEX COURT IN THE CASE OF BHARAT EARTH MOVERS (SUPRA) IS QUOTED BELOW: THE LAW IS SETTLED: IF A BUSINESS LIABILITY HAS DEFINITELY ARISEN IN THE ACCOUNTING YEAR, THE DEDUCTION SHOULD BE ALLOWED ALTHOUG H THE LIABILITY MAY HAVE TO BE QUANTIFIED AND DISCHARGED AT A FUTURE DATE. WHAT SHOULD BE CERTAIN IS THE INCURRING OF THE LIABILITY. IT SHOULD ALSO BE CAPABLE OF BEING ESTIMATED WITH REASONABLE CERTAINTY THOUGH THE ACTUAL QUANTIFICATION MAY NOT BE POSSIBLE . IF THESE REQUIREMENTS ARE SATISFIED THE LIABILITY IS NOT A CONTINGENT ONE. THE LIABILITY IS IN PRAESENTI THOUGH IT WILL BE DISCHARGED AT A FUTURE DATE. IT DOES NOT MAKE ANY DIFFERENCE IF THE FUTURE DATE ON WHICH THE LIABILITY SHALL HAVE TO BE DISCHARGED IS NOT CERTAIN.... APPLYING THE ABOVE SAID SETTLED PRINCIPLES TO THE FACTS OF THE CASE AT HAND WE ARE SATISFIED THAT THE PROVISION MADE BY THE APPELLANT COMPANY FOR MEETING THE LIABILITY INCURRED BY IT UNDER THE LEAVE ENCASHMENT SCHEME PROPORTIONATE WITH THE ENTITLEMENT EARNED BY EMPLOYEES OF THE COMPANY, INCLUSIVE OF THE OFFICERS AND THE STAFF, SUBJECT TO THE CEILING ON ACCUMULATION AS APPLICABLE ON THE RELEVANT DATE, IS ENTITLED TO DEDUCTION OUT OF THE GROSS RECEIPTS FOR THE ACCOUNTING YEAR DURING WHICH THE PROVISION IS MADE FOR THE LIABILITY. THE LIABILITY IS NOT A CONTINGENT LIABILITY. THE HIGH COURT WAS NOT RIGHT IN TAKING THE VIEW TO THE CONTRARY. 13. THE APPEAL SUCCEEDS AND IS ALLOWED. SECTION 43B(F ) IS STRUCK DOWN BEING ARBITRARY, UNCONSCIONABLE AND DE HORS THE APEX COURT DECISION IN THE CASE OF BHARAT EARTH MOVERS (SUPRA). IT IS OBSERVED THAT THE REVENUE HAD PREFERRED SPECIAL LEAVE PETITION BEFORE THE HON BLE SUPREME COURT AGAINST THE JUDGMENT O F HON BLE CALCUTTA HIGH COURT. THE HIGH COURT IN SPECIAL LEAVE PETITION TO APPEAL (CIVIL) CC.12060/2008 DATED 08.09.2008 HAD HELD AS UNDER : - THE PETITION WAS CALLED ON FOR HEARING TODAY. UPON HEARING COUNSEL THE COURT MADE THE FOLLOWING ORDER. ISSUED NOT ICE. IN THE MEANTIME, THERE SHALL BE STAY OF THE IMPUGNED JUDGMENT, UNTIL FURTHER ORDERS. ITA NO.1016/KOL/2012 METRO DAIRY LTD. A.Y.2008 - 09 4 LATER THE HON BLE SUPREME COURT IN SPECIAL LEAVE TO APPEAL (CIVIL) NO.(S), CC - 2288 9 /2008 DATED 8.5.2009 HAD HELD AS UNDER : - THE PETITION WAS CALLED ON FOR HEARING TODAY. UPON HEARING THE 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 IS APPROVED TILL DAY. IT IS MADE CLEAR THAT AS FAR AS OUTSTANDING INTEREST PAYMENT AS ON DATED, IT WOULD BE OPEN TO HAVE THE DEPARTMENT TO RECOVER THAT AMOUNT IN CASE CIVIL APPEAL OF THE DEPARTMENT IS ALLOWED. WE FURTHER MAK E IT CLEAR THAT THE ASSESSEE WOULD, DURING THE PENDENCY OF THIS CIVIL APPEAL, PAY TAX AS IF SECTION 43B(F) IS ON TH E STATUTE BOOK BUT AT THE SAME TIME IT WOULD BE ENTITLED TO MAKE A CLAIM IN ITS RETURNS . HENCE FROM THE AFORESAID JUDGMENT, IT CAN BE INFERRED THAT THE HON BLE SUPREME COURT HAD NOT STAYED THE JUDGMENT O F THE HON BLE CALCUTTA HIGH COURT DURING THE LEAVE PROCEEDINGS. HENCE AS ON DATE, THE HON BLE CALCUTTA HIGH COURT SHALL HAVE TO BE FOLLOWED. THEREFORE, WE ARE NOT INCLINED TO APPRECIATE THE CONTENTION OF THE LD. CIT(A) THAT THE HIGH COURT DECISION HAS BEEN STAYED. ACCORDINGLY, RELIANCE PLACED ON THE CALCUTTA HIGH COURT DECISION BY THE ASSESSEE IS SQUARELY APPLICABLE IN THE FACTS AND CIRCUMSTANCES OF THIS CASE. HOWEVER, WE DEEM IT FIT AND APPROPRIATE, IN THE INTEREST OF JUSTICE AND FAIR PLAY, TO SET ASIDE T HIS ISSUE TO THE LD. AO TO PASS ORDERS BASED ON THE OUTCOME OF THE MAIN APPEAL ON MERITS BY HON BLE SUPREME COURT AS STATED SUPRA. 7. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. O RDER PRONOUNC ED IN TH E COURT ON 31.0 8.2015. SD/ - SD/ - [MAHAVIR SINGH] [M.BALAGANESH] JUDICIAL MEMBER ACCOUNTANT MEMBER DATE : 31.08.2015. R.G .(.P.S.) ITA NO.1016/KOL/2012 METRO DAIRY LTD. A.Y.2008 - 09 5 COPY OF THE ORDER FORWARDED TO : 1 . METRO DAIRY LTD., 21, GOPAL MUKHERJEE ROAD, KOLKATA - 70000 2. 2 D.C.I.T., CIRCLE - 7 , KOLKATA. 3 . THE CIT - III , KOLKATA 4. THE CIT(A) - VIII, KOLKATA. 5 . DR, KOLKATA BENCHES, KOLKATA TRUE COPY , BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES