The Burdwan Central Co - Operative Bank Limited, Burdwan V. A.C.I.T Cir - 2,Burdwan, Burdwan

ITA 1243/KOL/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4593 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 3 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-09-2016
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 16-08-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 14-05-2013
• Court: TRIBUNAL
• Assessee Lawyers: PRATAP KANTI GHOSH F
• Keywords: Capital asset; Business income; Depreciation; Cost of acquisition
• Section: 143(3)

Judgement Text

ITA NO.1243/K/2013 BURDWAN CENTRAL CO-OPT.BANK LTD . A.Y. 2009-10 1 IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH A KOL KATA [BEFORE HONBLE SHRI N.V.VASUDEVAN, JM & SHRI M.B ALAGANESH, AM ] ITA NO.1243/KOL/2013 ASSESSMENT YEAR : 2009-10 THE BURDWAN CENTRAL CO-OPERATIVE -VERSUS- A.C.I.T., CIRCLE-2, BANK LTD., BURDWAN BURDWAN. (PAN:AABAT 3547 P) (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI PRATAP KANTI GHOSH, , F CA FOR THE RESPONDENT: SHRI SALLONG YADEN, ADDL.CIT DATE OF HEARING : 16.08.2016. DATE OF PRONOUNCEMENT : 02.09.2016. ORDER PER N.V.VASUDEVAN, JM: THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 05.02.2013 OF CIT(A)- DURGAPUR RELATING TO A.Y.2009-10. 2. GROUND NO.A RAISED BY THE ASSESSEE READS AS FOLLOWS :- A. ADDITION OF RS. 4,53,27,014/- DISALLOWING THE P ROVISION FOR LOSS OF INVESTMENT IN COMPUTING THE BUSINESS INCOME OF THE APPELLANT: 1. THE LEARNED ACIT FAILED TO APPRECIATE THAT INVES TMENTS/ SECURITIES HELD BY THE APPELLANT ARE THE STOCK-IN-TRADE OF THE (BANKING) B USINESS OF THE APPELLANT AND THE NOTIONAL LOSS SUFFERED ON ACCOUNT OF THE REVALUATIO N OF THE SAID 'SECURITIES AT THE CLOSE OF THE YEAR IS AN ALLOWABLE DEDUCTION IN THE COMPUTATI ON OF THE PROFITS OF THE APPELLANT. THEREFORE THE ADDITION IS UNJUSTIFIED AND MAY BE DE LETED. 2. THE LEARNED ACIT ERRED IN LAW BY NON CONSIDERING RELEVANT CASE LAWS AND APPLICABLE CBDT CIRCULARS PRODUCED BEFORE HIM BY THE APPELLANT DURING THE ASSESSMENT PROCEEDINGS. THEREFORE THE ADDITION IS ARBITRARY AN D BAD IN LAW AND MAY BE DELETED. 3. THE ORDER OF THE LEARNED ACIT IS SELF CONTRADICT ORY: THEREFORE THE ADDITION IS UNJUSTIFIED AND MAY BE DELETED. 3. THE ASSESSEE IS A COOPERATIVE SOCIETY ENGAGED IN THE BUSINESS OF BANKING. IN THE COURSE OF ASSESSMENT PROCEEDINGS U/S 143(3) OF THE INCOME TAX ACT, 1961 (ACT), THE ITA NO.1243/K/2013 BURDWAN CENTRAL CO-OPT.BANK LTD . A.Y. 2009-10 2 AO NOTICED THAT THE ASSESSEE HAS DEBITED IN THE PRO FIT AND LOSS ACCOUNT A SUM OF RS.4,53,27,014/- AS PROVISION FOR LOSS ON INVESTMEN TS. IT IS NOT IN DISPUTE THAT THE AMOUNT OF LOSS/DEPRECIATION IN THE MARKET VALUE SEC URITIES THAT WAS CLAIMED AS DEDUCTION IN THE PROFIT AND LOSS ACCOUNT WAS SECURI TIES HELD BY THE ASSESSEE UNDER THE CATEGORY AVAILABLE FOR SALE(AFS). THE ASSESSEE R ELIED ON THE DECISION OF THE HONBLE KERALA HIGH COURT IN THE CASE OF CIT VS NEDUNGADI B ANK LTD. (2003)_264 ITR 545 (KER.) FOR THE PROPOSITION THAT DEDUCTION FOR DEPRE CIATION IN VALUE OF SECURITIES HELD BY THE BANKS IS AN ALLOWABLE DEDUCTION IN COMPUTING TH E TAXABLE PROFITS AND THAT SECURITIES HELD BY THE BANKS CONSTITUTE THEREIN STO CK IN TRADE. IT WAS FURTHER HELD IN THE AFORESAID DECISION THAT NOTIONAL LOSS CLAIMED BY TH E ASSESSEE ON VALUATION OF SUCH SECURITIES AT THE CLOSE OF THE YEAR IS ALLOWABLE AS DEDUCTION IN COMPUTING THE TAXABLE PROFITS. THE ASSESSEE ALSO RELIED ON THE CIRCULAR N O.599 DATED 24.04.1991 ISSUED BY THE CBDT WHEREIN THE CBDT LAID DOWN THAT SECURITIES HELD BY THE BANKS MUST BE REGARDED AS THEIR STOCK IN TRADE AND THE CLAIM OF L OSS, IF DEBITED IN THE BOOKS OF ACCOUNT SHOULD BE GIVEN THE SAME TREATMENT AS GIVEN TO STOC K IN TRADE. 4 THE AO HOWEVER REFERRED TO THE DECISION OF THE H ONBLE SUPREME COURT IN THE CASE OF VIJAYA BANK VS CIT 187 ITR 541 (SC) AND ALSO REF ERRED TO THE FACT THAT CONSEQUENT TO THE AFORESAID JUDGEMENT CBDT HAD ISSUED VIDE CIR CULAR NO.610 DATED 31.07.1991 WHEREIN IT CLARIFIED THAT WHETHER A PARTICULAR INVE STMENT IN SECURITIES CONSTITUTE STOCK IN TRADE OR CAPITAL ASSET WAS A QUESTION OF FACT AN D THEREFORE AO SHOULD DETERMINE ON THE FACTS AND CIRCUMSTANCES OF EACH CASE AS TO WHET HER ANY PARTICULAR SECURITY CONSTITUTE STOCK IN TRADE OR INVESTMENT TAKING INTO ACCOUNT THE GUIDELINES ISSUED BY THE RBI FROM TIME TO TIME. IF THE INVESTMENTS IN SECURI TIES ARE REGARDED AS STOCK IN TRADE THEN THE CLAIM FOR DEDUCTION ON ACCOUNT OF DIMINUTI ON IN THE VALUE OF SUCH SECURITIES MUST BE ALLOWED. AFTER REFERRING TO THE SAID CIRCUL AR THE AO FURTHER OBSERVED THAT THE BANK IS NOT IN THE BUSINESS OF TRADING IN SECURITIE S AND THAT THE BANK IN THE PRESENT CASE WAS MAINTAINING INVESTMENT PORTFOLIO AND THEREFORE THE SAME CANNOT BE TREATED AS STOCK IN TRADE. THE AO ACCORDINGLY DISALLOWED THE C LAIM OF THE ASSESSEE FOR DEDUCTION ITA NO.1243/K/2013 BURDWAN CENTRAL CO-OPT.BANK LTD . A.Y. 2009-10 3 ON ACCOUNT OF LOSS ON INVESTMENTS OR DIMINUTION IN THE VALUE OF SECURITIES CLAIMED BY THE ASSESSEE. 5. ON APPEAL BY THE ASSESSEE THE CIT(A) CONFIRM ED THE ORDER OF AO WHICH GAVE RISE TO GROUND NO.A BEFORE THE TRIBUNAL. 6. WE HAVE HEARD THE SUBMISSIONS OF THE LD. COU NSEL FOR THE ASSESSEEE, WHO REITERATED THE STAND TAKEN BY THE ASSESSEE BEFORE T HE AO. HE FURTHER BROUGHT TO OUR NOTICE THAT THE CBDT ISSUED A CIRCULAR/INSTRUCTION NO.17/2008 DATED 26.11.2008 WHEREIN THE CBDT HAS GIVEN INSTRUCTIONS WITH REGARD TO THE CLAIM FOR DEDUCTION ON ACCOUNT OF LOSS ON INVESTMENTS OF SECURITIES HELD B Y A BANK WHICH ARE AS FOLLOWS :- VII) AS PER RBI GUIDELINES DATED 16TH OCTOBER, 200 0, THE INVESTMENT PORTFOLIO OF THE BANKS IS REQUIRED TO BE CLASSIFIED UNDER THREE CATE GORIES VIZ. HELD TO MATURITY (HTM), HELD FOR TRADING (HFT) AND AVAILABLE FOR SALE (AFS) . INVESTMENTS CLASSIFIED UNDER HTM CATEGORY NEED NOT BE MARKED TO MARKET AND ARE C ARRIED AT ACQUISITION COST UNLESS THESE ARE MORE THAN THE FACE VALUE, IN WHICH CASE T HE PREMIUM SHOULD BE AMORTISED OVER THE PERIOD REMAINING TO MATURITY. IN THE CASE OF HF T AND AFS SECURITIES FORMING STOCK- IN-TRADE OF THE BANK, THE DEPRECIATION/APPRECIATION IS TO BE AGGREGATED SCRIP-WISE AND ONLY NET DEPRECIATION, IF ANY, IS REQUIRED TO BE PR OVIDED FOR IN THE ACCOUNTS. THE LATEST GUIDELINES OF THE RBI MAY BE REFERRED TO FOR ALLOWI NG ANY SUCH CLAIMS. ACCORDING TO HIM THE SECURITIES HELD BY THE ASSESSE E IN THE PRESENT CASE WERE ADMITTEDLY IN THE CATEGORY OF AVAILABLE FOR SALE AND THEREFORE EVEN AS PER THE CBDT INSTRUCTION THE CLAIM OF THE ASSESSEE HAS TO BE ALL OWED. THE LD. DR RELIED ON THE ORDER OF AO. 7. WE HAVE GIVEN A CAREFUL CONSIDERATION. IN OUR VIEW THE ISSUE IS SQUARELY COVERED BY THE DECISION OF THE HONBLE KERALA HIGH COURT IN THE CASE OF NEDUNGADI BANK LTD. THE HONBLE KERALA HIGH COURT ALSO CONSIDERED THE D ECISION RENDERED BY THE HONBLE SUPREME COURT IN THE CASE OF VIJAYA BANK (SUPRA) RE FERRED TO BY THE AO IN THE ORDER OF ASSESSMENT AND HAS TAKEN THE VIEW THAT SECURITI ES HELD BY BANKS CONSTITUTE THEIR STOCK-IN-TRADE AND CONSEQUENTLY THE NOTIONAL LOSS C LAIMED BY THE ASSESSEE-BANKS ON VALUATION OF SUCH SECURITIES AT THE CLOSE OF THE YE AR IS ALLOWABLE AS DEDUCTION IN COMPUTING THE TAXABLE PROFITS. THE HONBLE COURT H AS REFERRED TO CBDT CIRCULAR AND ITA NO.1243/K/2013 BURDWAN CENTRAL CO-OPT.BANK LTD . A.Y. 2009-10 4 HAS HELD THAT SAME VIEW HAS BEEN TAKEN BY THE CBDT IN CIRCULAR NO. 599, DT. 24TH APRIL, 1991. THE COURT FURTHER HELD THAT IT IS NOW SETTLED BY A SERIES OF DECISIONS THAT THE SECURITIES HELD BY THE BANKS CONSTITUTE THEIR S TOCK-IN-TRADE OR INVESTMENT AND CONSEQUENTLY THE LOSS CLAIMED BY THE BANKS ON THE V ALUATION OF THEIR SECURITIES SHOULD BE ALLOWED AS A DEDUCTION IN COMPUTING THE TAXABLE PROFITS. IN FACT, THE CBDT IN CIRCULAR NO. 599, DT. 24TH APRIL, 1991, HAS TAKEN T HE VERY SAME VIEW WHICH IS CONSISTENT WITH THE VIEW TAKEN IN THE DECISIONS OF THIS COURT AND OF THE SUPREME COURT. FOR ALL THESE REASONS, THE TRIBUNAL HAS RIGH TLY HELD THAT THE SECURITIES HELD BY THE ASSESSEE-BANK IN ALL THESE CASES ARE THE STOCK- IN-TRADE OF THE BUSINESS OF THE ASSESSEE-BANKS AND THE NOTIONAL LOSS SUFFERED ON AC COUNT OF THE REVALUATION OF THE SAID SECURITIES AT THE CLOSE OF THE YEAR IS AN ALLOWABLE DEDUCTION IN THE COMPUTATION OF THE PROFITS OF THE APPELLANT. THE HONBLE COURT REFERR ED TO THE FOLLOWING JUDGMENTS CIT VS. SOUTH INDIA BANK LTD. 241 ITR 374 (KER), MALABAR CO-OPERATIVE CENTRAL BANK LTD. VS. CIT 101 ITR 87 (KER), UCO BANK VS. CIT 240 ITR 355 (SC), CIT VS. KARNATAKA STATE CO-OPERATIVE APEX BANK 251 ITR 194 (SC) AND MEHSANA DISTRICT CENTRAL CO-OPERATIVE BANK LTD. VS. ITO 251 ITR 522 (SC) AND DISTINGUISHED THE DECISION IN THE CASE OF VIJAYA BANK LTD. VS. ADDL. CIT (1991) 94 CTR (SC) 216 : (1991) 187 ITR 541 (SC). THE HONBLE COURT FINALLY CONCLUDED THAT SECURITIES HELD BY BANKS CONSTITUTE THEIR STOCK-IN-TRADE AND CONSEQ UENTLY THE NOTIONAL LOSS CLAIMED BY THE ASSESSEE-BANKS ON VALUATION OF SUCH SECURITIES AT THE CLOSE OF THE YEAR IS ALLOWABLE AS DEDUCTION IN COMPUTING THE TAXABLE PROFITS. THE HONBLE COURT DISTINGUISHED THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F VIJAYA BANK (SUPRA) AS FOLLOWS: 20. HERE, IT MUST BE NOTED THAT THE ASSESSING AUTHORIT Y HAD IN FACT REOPENED THE ASSESSMENT ON THE BASIS OF THE DECISION OF THE SUPR EME COURT IN VIJAYA BANK LTD. VS. ADDL. CIT (SUPRA). IN THAT CASE, THE QUESTION WHICH AROSE FOR CONSIDERATION WAS AS TO WHETHER A SUM OF RS. 58,568 REPRESENTING INTEREST A CCRUED ON SECURITIES TAKEN BY THE ASSESSEE-BANK FROM THE JAYALAKSHMI BANK LTD. AND AN OTHER SUM OF RS. 11,630 REPRESENTING INTEREST ACCRUED UPTO THE DATE OF PURC HASE IN THE CASE OF SECURITIES PURCHASED BY THE ASSESSEE-BANK FROM THE OPEN MARKET ARE ADMISSIBLE AS DEDUCTION UNDER THE PROVISIONS OF SS. 19, 20 AND 37 OF THE AC T. IN THAT CONTEXT, THE SUPREME COURT RELIED ON A DECISION OF THE COURT OF APPEAL I N IRC VS. PILCHER (1949) 31 TAX CASES 314 (CA) WHERE IT WAS OBSERVED THAT OUTLAY ON PURCHASE OF AN INCOME-BEARING ASSET IS IN THE NATURE OF CAPITAL ASSET. THE SUPREM E COURT OBSERVED IN VIJAYA BANKS CASE THAT THE PRICE PAID FOR THE SECURITIES WAS DET ERMINED WITH REFERENCE TO THEIR ITA NO.1243/K/2013 BURDWAN CENTRAL CO-OPT.BANK LTD . A.Y. 2009-10 5 ACTUAL VALUE AS WELL AS THE INTEREST WHICH HAD ACCR UED ON THEM TILL DATE OF PURCHASE, THAT WHATEVER WAS THE CONSIDERATION WHICH PROMPTED THE ASSESSEE TO PURCHASE THE SECURITIES THE PRICE PAID FOR THEM WAS IN THE NATUR E OF A CAPITAL OUTLAY AND NO PART OF IT CAN BE SET OFF AS EXPENDITURE AGAINST INCOME ACC RUING ON THOSE SECURITIES. HERE, IT MUST BE NOTED THAT THE SUPREME COURT HAS NOT AT ALL CONSIDERED THE QUESTION WITH REGARD TO THE CHARACTER OF SECURITIES FROM WHICH IN TEREST INCOME IS EARNED. NO CONTENTION IS SEEN TAKEN BY ANY OF THE PARTIES THAT THE SECURITIES INVOLVED IN THE SAID CASE REPRESENTED STOCK-IN-TRADE. HENCE, THE DECISIO N RENDERED IN THE SAID CASE CANNOT BE TAKEN AS AN AUTHORITY FOR THE POSITION THAT THE SECURITIES HELD BY THE ASSESSEE IN THE PRESENT CASE IN COMPLIANCE WITH THE PROVISIONS OF T HE BANKING REGULATION ACT IS TO BE HELD AS A CAPITAL INVESTMENT. AS WE HAVE ALREADY NO TED, THIS COURT AND THE SUPREME COURT HAVE CLEARLY TAKEN THE VIEW THAT THE GOVERNME NT SECURITIES ACQUIRED BY THE ASSESSEE-BANK IN COMPLIANCE WITH THE PROVISIONS OF THE BANKING REGULATION ACT HAS TO BE TREATED AS STOCK-IN-TRADE OF THE BUSINESS OF THE BANK. IN FACT, THE CENTRAL BOARD OF DIRECT TAXES IN THE CIRCULAR EXTRACTED ABOVE HAS TA KEN THE VERY SAME VIEW WHICH, ACCORDING TO US, IS CONSISTENT WITH THE VIEW TAKEN IN THE DECISIONS OF THIS COURT AND OF THE SUPREME COURT DISCUSSED ABOVE. HERE, IT MUST BE NOTED THAT TILL THE DECISION OF THE SUPREME COURT IN VIJAYA BANKS CASE (SUPRA) THE ASS ESSING AUTHORITY HAS BEEN TAKING THE CONSISTENT VIEW THAT THE ASSESSEES ARE ENTITLED TO DEPRECIATION ON ACCOUNT OF THE NOTIONAL LOSS SUFFERED BY THEM ON REVALUATION OF TH E SECURITIES. IN FACT, IN ALL THE REASSESSMENT CASES, THE ASSESSING AUTHORITY HAD ORI GINALLY GRANTED DEDUCTION BY WAY OF DEPRECIATION OF THE NOTIONAL LOSS INCURRED BY TH E ASSESSEE AND THE ONLY REASON FOR DENYING THE SAID RELIEF TO THE ASSESSEES IS THE DEC ISION TO THE SUPREME COURT IN VIJAYA BANKS CASE. VIJAYA BANKS CASE (SUPRA) AS WE HAVE ALREADY NOTED, DOES NOT LAY DOWN ANY CLEAR PROPOSITION THAT THE SECURITIES HELD BY A BANK CANNOT BE CONSIDERED AS STOCK-IN-TRADE OF THE BUSINESS OF THE BANK. 21. FOR ALL THESE REASONS, WE ARE OF THE VIEW THAT THE TRIBUNAL HAS RIGHTLY HELD THAT THE SECURITIES HELD BY THE ASSESSEE-BANK IN ALL THESE C ASES ARE THE STOCK-IN-TRADE OF THE BUSINESS OF THE ASSESSEE-BANKS AND THE NOTIONAL LOS S SUFFERED ON ACCOUNT OF THE REVALUATION OF THE SAID SECURITIES AT THE CLOSE OF THE YEAR IS AN ALLOWABLE DEDUCTION IN THE COMPUTATION OF THE PROFITS OF THE APPELLANT. TH IS DISPOSES OF THE FIRST TWO QUESTIONS MENTIONED IN PARA 10 ABOVE. 8. IN THE LIGHT OF THE ABOVE JUDICIAL PRONOUNCEM ENTS, WE ARE OF THE VIEW THAT THE CLAIM FOR DEDUCTION MADE BY THE ASSESSEE SHOULD BE ALLOWED. ACCORDINGLY THE AO IS DIRECTED TO ALLOW THE CLAIM OF THE ASSESSEE FOR DED UCTION OF THE AFORESAID SUM. GR.NO.A IS ACCORDINGLY ALLOWED. 9. GROUND NO. B RAISED BY THE ASSESSEE READS AS FOLLOWS :- B. ADDITION OF RS. 1,50,00,000/- DISALLOWING THE P ROVISION OF ARREAR SALARY IN COMPUTING THE BUSINESS INCOME OF THE APPELLANT: ITA NO.1243/K/2013 BURDWAN CENTRAL CO-OPT.BANK LTD . A.Y. 2009-10 6 1. THE LEARNED ACIT FAILED TO APPRECIATE THAT ARREA R SALARY IS AN ALLOWABLE DEDUCTION FOR COMPUTING THE PROFIT OF THE APPELLANT; THEREFOR E THE ADDITION IS UNJUSTIFIED AND MAY BE DELETED. 2. IN HIS ORDER THE LEARNED ACIT ADMITTED THAT 'REV ISION OF PAY SCALE BECOME CERTAIN, THEREFORE LIABILITY FOR ARREAR OF SCALE WAS ALSO BE COME OBVIOUS'. THEREFORE THE LEARNED ACIT CONTRADICTED HIMSELF BY DISALLOWING THE CERTAI N AND OBVIOUS LIABILITY IN COMPUTING THE BUSINESS INCOME OF THE APPELLANT. HENCE THE ADD ITION IS ARBITRARY AND BAD IN LAW AND MAY BE DELETED. 10. AS FAR AS GROUND NO. B IS CONCERNED, THE ASS ESSEE CLAIMED AS DEDUCTION A SUM OF RS.1,50,00,000/- ON ACCOUNT OF PROVISION FOR ARREA RS OF SALARY IN PROFIT AND LOSS ACCOUNT. IT WAS SUBMITTED BY THE ASSESSEE THAT ON 3 1.10.2007, THE EARLIER AGREEMENT BETWEEN THE ASSESSEE AND THE EMPLOYEES UNION REGARD ING PAY SCALES OF THE EMPLOYEES CAME TO AN END AND THEREFORE THERE WAS A NEED TO DE TERMINE FRESH PAY SCALES AFTER NEGOTIATION WITH THE EMPLOYEES UNION. THE ASSESSEE SUBMITTED THAT THE TALKS WITH THE EMPLOYEES UNION WERE IN PROGRESS AND THE NEW PAY SC ALES WERE NOT DETERMINED. THE ASSESSEE FURTHER SUBMITTED THAT THE LIABILITY ON AC COUNT OF ARREARS OF SALARY PAYABLE TO THE EMPLOYEES BY THE ASSESSEE IS CERTAIN AND THAT A SUM OF RS.1.5 CRORE QUANTIFIED BY THE ASSESSEE WAS REASONABLE AND FAIR ESTIMATION AND THEREFORE THE CLAIM OF THE ASSESSEE FOR DEDUCTION OF THE AFORESAID SUM SHOULD BE ALLOWE D. 11. THE AO HOWEVER WAS OF THE VIEW THAT THE LIABIL ITY IN QUESTION HAD NOT CRYSTALLISED DURING THE PREVIOUS YEAR AND THEREFORE THE CLAIM FO R DEDUCTION CANNOT BE ALLOWED. ON APPEAL BY THE ASSESSEE THE CIT(A) CONFIRMED THE ORD ER OF AO. HENCE GR.NO.B BY THE ASSESSEE BEFORE THE TRIBUNAL. 12. WE HAVE HEARD THE RIVAL SUBMISSIONS. THE AL LOWABILITY WITH REGARD TO CLAIMING DEDUCTION ON ACCOUNT OF PROVISION HAS BEEN LAID DOW N BY THE HONBLE SUPREME COURT IN THE CASE OF BHARAT EARTH MOVERS 245 ITR 428. IN THE AFORESAID DECISION OF THE HONBLE SUPREME COURT IT HAS BEEN HELD THAT IF A BU SINESS LIABILITY HAS DEFINITELY ARISEN IN THE ACCOUNTING YEAR, DEDUCTION IS ALLOWABLE ALTH OUGH THE LIABILITY MAY HAVE TO QUANTIFIED AND DISCHARGED AT A FUTURE DATE. THE COU RT HELD THAT WHAT SHOULD BE CERTAIN IS THE INCURRING OF THE LIABILITY AND ITS QUANTIFIC ATION WITH REASONABLE CERTAINTY. AT THE TIME OF HEARING THE LD. COUNSEL FOR THE ASSESSEE PO INTED OUT THAT AN AGREEMENT HAS BEEN REACHED WITH THE EMPLOYEES UNION AND FRESH PAY SCAL ES HAVE BEEN FINALISED. WE ARE OF ITA NO.1243/K/2013 BURDWAN CENTRAL CO-OPT.BANK LTD . A.Y. 2009-10 7 THE VIEW THAT NOW THAT THE ACTUAL SALARIES QUANTIFI ED ARE AVAILABLE, IT WOULD BE JUST AND PROPER TO COMPARE AND SEE AS TO WHETHER THE ESTIMAT E OF THE LIABILITY MADE BY THE ASSESSEE BASED ON WHICH PROVISION ON ACCOUNT OF ARR EARS OF SALARY PAYABLE WAS MADE WAS REASONABLE. IF THE ESTIMATE IS FOUND TO BE REA SONABLE THEN THE DEDUCTION CLAIMED BY THE ASSESSEE SHOULD BE ALLOWED. IN THIS REGARD W E ARE OF THE VIEW THAT IN THE PRESENT CASE THE LIABILITY OF THE ASSESSEE WAS CERTAIN IN T HE SENSE THAT AS PER THE AGREEMENT WITH THE EMPLOYEES UNION, SALARY SCALES HAD TO BE REVISE D W.E.F. 01.11.2007. IT IS ONLY THE QUANTIFICATION OF THE LIABILITY BASED ON WHICH PROV ISION WAS MADE BY THE ASSESSEE THAT NEEDS TO BE EXAMINED. WE THEREFORE SET ASIDE THE OR DER OF CIT(A) AND DIRECT THE AO TO EXAMINE THE CLAIM OF THE ASSESSEE IN THE LIGHT OF T HE DIRECTIONS GIVEN ABOVE. 13. THE OTHER GROUNDS OF APPEAL RAISED BY THE ASSE SSEE ARE EITHER GENERAL OR CONSEQUENTIAL IN NATURE AND DO NOT NEED ANY ADJUDIC ATION. 14. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. O RDER PRONOUNCED IN THE COURT ON 02.09.2016. SD/- SD/- [M.BALAGANESH ] [ N.V.VASUDEVAN ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 02.09.2016. [RG PS] COPY OF THE ORDER FORWARDED TO: 1.THE BURDWAN CENTRAL CO-OPERATIVE BANK LIMITED, HE AD OFFICE, G.T.ROAD, P.O.BURDWAN, DIST. BURDWAN, PIN-713101. 2. .A.C.I.T., CIRCLE-2, BURDWAN. 3. CIT(A)-DURGAPUR 4. CIT-DURGAPUR. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER, ASST. REGISTRAR, ITAT, KOLKATA BENCHES