DCIT CORPORATE CIRCLE 3 (1), CHENNAI V. M/S TAMILNADU CIVIL SUPPLIES CORPORATION LIMITED, CHENNAI

ITA 1685/CHNY/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 5142 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-02-2019
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 17-05-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: C VATSALA
• Assessee Lawyers: P SELVAMOORTHY

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . . . , ! ' # , % #& BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ./ ITA NO.1685/CHNY/2018 ) *) / ASSESSMENT YEAR : 2014-15 THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 3(1), CHENNAI - 600 034. V. M/S TAMIL NADU CIVIL SUPPLIES CORPORATION LIMITED, NO.12, THAMBUSAMY ROAD, KILPAUK, CHENNAI - 600 010. PAN : AABCT 0551 H (,-/ APPELLANT) (./,-/ RESPONDENT) ,- 0 1 / APPELLANT BY : SMT. C. VATSALA, CIT ./,- 0 1 / RESPONDENT BY : SHRI Y. SRIDHAR, CA & SHRI P. SELVAMOORTHY, CA 2 0 3% / DATE OF HEARING : 09.01.2019 45* 0 3% / DATE OF PRONOUNCEMENT : 04.02.2019 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER : THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) -11, CHENN AI, DATED 23.02.2018 AND PERTAINS TO ASSESSMENT YEAR 2014-15. 2. SMT. C. VATSALA, THE LD. DEPARTMENTAL REPRESENTA TIVE, SUBMITTED THAT THE ONLY ISSUE ARISES FOR CONSIDERAT ION IS PROVISION 2 I.T.A. NO.1685/CHNY/18 MADE BY THE ASSESSEE FOR PAYMENT OF LEAVE SALARY. ACCORDING TO THE LD. D.R., AS PER THE AUDIT REPORT FILED UNDER S ECTION 44AB OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT'), THE ASSE SSEE MADE A PROVISION TO THE EXTENT OF 35,46,29,470/- FOR LEAVE ENCASHMENT AS ON 31.03.2014. ACCORDING TO THE LD. D.R., THE ASSE SSEE CLAIMS THAT ONLY AN AMOUNT OF 16,64,72,150/- WAS PAID DURING THE YEAR UNDER CONSIDERATION. THE BALANCE AMOUNT OF 18,81,57,320/- WAS PAYABLE AS ON 31.03.2014. THEREFORE, ACCORDING TO THE LD. D.R., IT IS ONLY A MERE PROVISION. ACCORDING TO THE LD. D.R., THE PRO VISIONS OF SECTION 43B(F) OF THE ACT, EVEN THOUGH STRUCK DOWN BY THE C ALCUTTA HIGH COURT, THE SAME WAS STAYED BY THE APEX COURT. THER EFORE, ACCORDING TO THE LD. D.R., THE CALCUTTA HIGH COURT S JUDGMENT IS NOT IN OPERATION, HENCE THE PROVISIONS OF SECTION 43B(F ) OF THE ACT HAS TO BE FOLLOWED. PLACING RELIANCE ON THE ORDER OF THIS TRIBUNAL IN ACIT V. WARDEX PHARMACEUTICALS LTD. IN I.T.A. NOS.2146 & 21 47/MDS/2014 DATED 11.09.2015, THE LD. D.R. SUBMITTED THAT ON ID ENTICAL SITUATION, THIS TRIBUNAL FOUND THAT THE PROVISION FOR LEAVE EN CASHMENT CANNOT BE ALLOWED. A SIMILAR VIEW WAS TAKEN BY THE KERALA HIGH COURT IN SOUTH INDIAN BANK LIMITED (45 TAXMANN.COM 428). AC CORDING TO THE LD. D.R., THIS IS THE ONLY JUDGMENT AVAILABLE A FTER THE APEX COURT STAYED THE JUDGMENT OF CALCUTTA HIGH COURT IN EXIDE INDUSTRIES 3 I.T.A. NO.1685/CHNY/18 LIMITED. THEREFORE, ACCORDING TO THE LD. D.R., THE CIT(APPEALS) IS NOT JUSTIFIED IN ALLOWING THE CLAIM OF THE ASSESSEE . 3. ON THE CONTRARY, SHRI Y. SRIDHAR, THE LD. REPRES ENTATIVE FOR THE ASSESSEE, SUBMITTED THAT THE ASSESSEE RECEIVED SUBSIDY FOR PAYMENT OF LEAVE ENCASHMENT FROM THE STATE GOVERNME NT. THEREFORE, ACCORDING TO THE LD. REPRESENTATIVE, TAX ING THE LEAVE ENCASHMENT WOULD AMOUNT TO INDIRECTLY TAXING THE ST ATE GOVERNMENT, HENCE, THERE CANNOT BE ANY LEVY OF TAX IN RESPECT OF LEAVE ENCASHMENT. MOREOVER, ACCORDING TO THE LD. R EPRESENTATIVE, ANOTHER DIVISION BENCH OF THIS TRIBUNAL IN ACIT V. TAMIL NADU WAREHOUSING CORPORATION IN I.T.A. NO.924/MDS/2011 V IDE ORDER DATED 22.07.2011, ALLOWED SIMILAR CLAIM OF THE ASSE SSEE. THEREFORE, ACCORDING TO THE LD. REPRESENTATIVE, THE CIT(APPEALS) HAS RIGHTLY ALLOWED THE CLAIM OF THE ASSESSEE. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. ADMITTEDLY, SECTION 43B(F) OF THE ACT WAS INTRODUCED BY FINANCE ACT, 2001 WITH EFFECT FROM 01.04.202. IN VIEW OF SECTION 43B(F) O F THE ACT, A PROVISION FOR LEAVE ENCASHMENT CANNOT BE ALLOWED. WHILE EXAMINING THE CONSTITUTION OF VALIDITY OF PROVISION S OF SECTION 43B(F) 4 I.T.A. NO.1685/CHNY/18 OF THE ACT, THE CALCUTTA HIGH COURT IN EXIDE INDUST RIES LIMITED (292 ITR 470), FOUND THAT SECTION 43B(F) IS UNCONSTITUTI ONAL AND ACCORDINGLY IT WAS STRUCK DOWN. ON APPEAL BY THE R EVENUE BEFORE THE APEX COURT, THE APEX COURT STAYED THE OPERATION OF JUDGMENT OF CALCUTTA HIGH COURT. IN VIEW OF THE ABOVE, THE JUD GMENT OF CALCUTTA HIGH COURT IS NOT IN OPERATION. IN OTHER WORDS, TH E PROVISIONS OF SECTION 43B(F) OF THE ACT CONTINUES TO BE IN STATUT E BOOK. 5. THE KERALA HIGH COURT IN SOUTH INDIAN BANK LIMIT ED (SUPRA) EXAMINED THE ISSUE AFTER THE STAY GRANTED BY THE AP EX COURT, AND FOUND THAT THE PROVISIONS OF SECTION 43B(F) WOULD B E APPLICABLE. THE DIVISION BENCH OF THIS TRIBUNAL HAS ALSO EXAMIN ED THIS ISSUE IN WARDEX PHARMACEUTICALS LTD. (SUPRA) AND FOUND THAT THE PROVISIONS OF SECTION 43B(F) OF THE ACT HAS TO BE APPLIED, THE REFORE, THE PROVISION FOR LEAVE ENCASHMENT CANNOT BE ALLOWED. WHEREAS, ANOTHER DIVISION BENCH OF THIS TRIBUNAL IN TAMIL NA DU WAREHOUSING CORPORATION (SUPRA) HAS FOUND THAT PROVISION FOR LE AVE ENCASHMENT HAS TO BE ALLOWED. HOWEVER, THE PROVISIONS OF SECT ION 43B(F) OF THE ACT WAS NOT BROUGHT TO THE NOTICE OF THE DIVISION B ENCH. THEREFORE, THE EARLIER BENCH HAD NO OCCASION TO CONSIDER THE S AME. IN VIEW OF THE ABOVE, THE ORDER OF THE DIVISION BENCH OF THIS TRIBUNAL IN TAMIL 5 I.T.A. NO.1685/CHNY/18 NADU WAREHOUSING CORPORATION (SUPRA) MAY NOT BE APP LICABLE TO THE FACTS OF THE CASE. SINCE THE PROVISION FOR LEA VE ENCASHMENT CANNOT BE ALLOWED IN VIEW OF SECTION 43B(F) OF THE ACT, THIS TRIBUNAL IS UNABLE TO UPHOLD THE ORDER OF THE CIT(APPEALS). ACCORDINGLY, ORDER OF THE CIT(APPEALS) IS SET ASIDE AND THAT OF THE ASSESSING OFFICER IS RESTORED. 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S ALLOWED. ORDER PRONOUNCED IN THE COURT ON 4 TH FEBRUARY, 2019 AT CHENNAI. SD/- SD/- ( ! ' # ) ( . . . ) (INTURI RAMA RAO) (N.R.S. GANESAN) % / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 7 /DATED, THE 4 TH FEBRUARY, 2019. KRI. 0 .389 :9*3 /COPY TO: 1. ,- /APPELLANT 2. ./,- /RESPONDENT 3. 2 ;3 () /CIT(A)-11, CHENNAI 4. PRINCIPAL CIT, CHENNAI-3, CHENNAI 5. 9< .3 /DR 6. =) > /GF.