The Barmer Central Cooperative Bank Ltd., BARMER V. ACIT, BARMER

ITA 212/JODH/2010

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3109 (ITAT-JODHPUR)
• Duration Of Justice: 3 year(s) 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-07-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 16-02-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 07-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR DEEPAK SEHGAL
• Assessee Lawyers: GAUTAM VAID
• Keywords: Business expenditure; Commercial expediency
• Section: 234B; 37; 263

Judgement Text

[1] IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N. K. SAINI, ACCOUNTANT MEMBER I.T.A. NO.212/JODH/2010 ASSESSMENT YEAR:2007-08 & I.T.A. NO.412/JODH/2011 ASSESSMENT YEAR:2008-09 & I.T.A. NO.378/JODH/2012 ASSESSMENT YEAR:2009-10 THE BARMER CENTRAL COOPERATIVE VS. A.C.I.T., BANK LIMITED, CIRCLE BARMER, MAHAVEER NAGAR, BARMER. BARMER. PAN:AAABT2371H (APPELLANT) (RESPONDENT) APPELLANT BY : S/SHRI GAUTAM VAID & RAJENDRA JAI N RESPONDENT BY : DR. DEEPAK SEHGAL, D.R. DATE OF HEARING : 04/07/2013 DATE OF PRONOUNCEMENT : 15/07/2013 ORDER PER N. K., SAINI: THESE THREE APPEALS OF THE ASSESSEE ARE DIRECTED AGAINST THE SEPARATE ORDERS DATED 11/02/2010, 12/10/2010 AND 16/12/2011 FOR THE ASSESSMENT YEARS 2007-08, 2008-09 AND 2009-2010 RESPECTIVELY O F CIT(A), JODHPUR. SINCE THE ISSUES INVOLVED IN THESE APPEALS ARE COMM ON AND THE APPEALS [2] WERE HEARD TOGETHER, SO THESE ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. FIRST WE WILL DEAL WITH I.T.A. NO.212/JODH/2010. IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. THE LEARNED CIT(A) ERRED IN CONFIRMING THE ORDE R PASSED BY THE LEARNED ACIT AND THEREBY ERRED IN CONFIRM ING THE ADDITION OF RS.65,67,700/- DEBITED BY THE APPEL LANT TO SURAKHASA FUND, WHICH AMOUNT IS SPENT AS PER THE DIRECTIONS OF STATE GOVT, AND IS THUS ALLOWABLE AS DEDUCTION AND IT IS PRAYED THAT THE SAME NEEDS TO BE ALLOWED. 2. THE LEARNED CIT(A) ERRED, IN CONFIRMING THE ADD ITION OF RS.15,71,767/- BEING PREMIUM PAID TO LIC GROUP GRATUITY SCHEME, THE LIC HAD ACTUALLY PAID TO THE RETIRING EMPLOYEES GRATUITY RS.17,85244/-, WHICH HA VING BEEN PAID ON BEHALF OF APPELLANT IT IS AN AMOUNT WH ICH IS DEDUCTIBLE U/S 36 OR 37 AS BUSINESS EXPENDITURE. THE SAME NEEDS SIR, TO BE ALLOWED. 3. THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDIT ION OF RS.28,17,236/- HAVING BEEN PAID BY THE APPELLANT AS PREMIUM FOR LEAVE ENCASHMENT GROUP SCHEME. THE LIC IN FACT PAID A SUM OF R S .12,34,542/- TO THE EMPLOYEES OF APPELLANT, THE SAME IS EXPENDITURE MADE IN APPELLANTS ACCOUNT ON BEHALF OF APPELLANT AND NEEDS TO BE DIRECTED SIR TO BE ALLOWED. 4. THAT IN ANY CASE IT IS PRAYED AND HAS SO BEEN PR AYED BEFORE THE LEARNED CIT(A) IN WRITING, THAT EITHER RS.28,17,236/- AND RS.15,71,767/- SHOULD BE ALLOWED OR IN ANY CASE THE ACTUAL PAYMENTS/ACTUAL EXPENDITURE UNDER THESE HEADS FULLY PROVED BEING RS.17,85,244/- AND RS.12,34,542/- NEEDS TO BE ALLOWED AS DEDUCTION/EXPENDITURE TO THE APPELLANT. [3] 5. AS REGARDS NON RAISING OF THESE POINTS/GROUNDS/L EGAL POSITION BEFORE THE LEARNED ACIT, AND AS REGARDS T HE APPLICABILITY OF THE RATIO LAID DOWN IN THE CASE OF PUNJAB FEED MILLS LTD. 228 ITR 386 P&H, THE CASE HAS GOT N O APPLICATION AS IS CLEAR FROM THE ORDER ASSESSMENT T HAT NO OPPORTUNITY WAS ALLOWED TO THE APPELLANT BY THE LEARNED ACIT TO EXPLAIN THE DEDUCTIONS AND SUBMIT ARGUMENTS WITH REGARD TO LEAVE ENCASHMENT AND GRATUITY, THE LEARNED CIT(A) WAS THEREFORE LEGALLY AUTHORISED AND BOUND TO CONSIDER THE PLEA /ALTERNAT IVE RAISED BEFORE THE LEARNED CIT(A). IN ANY CASE IT IS PRAYED THAT THE ACTUAL EXPENDITURE NEEDS TO BE ALLO WED HAVING BEEN MADE BY LIC DEBITING ASSESSEE'S ACCOUNT IN RESPECT OF WHICH ALL THE DETAILS ARE IN PAPER BOOK. 6. THAT THE LEARNED CIT(A) ERRED IN DISALLOWING TH E GROUND ABOUT THE ILLEGALITY OF THE CHARGE OF INTEREST U/S 234B AND 234C. THERE IS NO ORDER ABOUT SEC 234C IT IS TH US ILLEGAL, AND IN ANY CASE IN VIEW OF THE LAW LAID DO WN BY HON'BLE PATNA HIGH COURT IN THE CASE OF RANCHI CLUB LTD. VS. CIT 85 TAXMAN 201 (CIVIL APPEAL ALSO DISMISSED BY SUPREME COURT (2000) 114 TAXMAN 414 (SC), THE INTEREST IS NOT CHARGEABLE IN THE FACTS AND CIRCUMS TANCES OF THE CASE, AND IN ANY CASE IT CAN BE CHARGED ON RETURNED INCOME ONLY. THE GROUND IT IS PRAYED NEEDS TO BE ALLOWED. 7. THAT THE APPELLANT PRAYS AND SEEKS PERMISSION (A ) TO ADD TO THE GROUNDS OF APPEAL (B) ALTER AND OR AMEND THE GROUNDS OF APPEAL AT ANY TIME BEFORE THE HEARING AN D OR AT THE TIME OF HEARING OF THIS APPEAL. 3. FIRST ISSUE IN THIS APPEAL RELATES TO THE CONFI RMATION OF ADDITION OF RS.65,67,700/- DEBITED BY THE ASSESSEE TO SURAKSHA FUND. 4. THE FACTS RELATED TO THIS ISSUE, IN BRIEF, ARE T HAT THE ASSESSEE FILED THE RETURN OF INCOME ON 31/10/2007 DECLARING AN INCOME OF RS.3,89,69,650/- AND THE CASE WAS SELECTED FOR SCRUTINY. DURING THE COURSE OF ASSESSMENT [4] PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD DEBITED PROVISION FOR SURAKSHA FUND AMOUNTING TO RS.65,67,7 00/-. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE SAID FUND WAS NOT CREATED BY THE INSTRUCTIONS OF RBI BUT IT WAS CREATED BY THE ORDER OF OFFICE OF THE REGISTRAR, CO-OPERATIVE SOCIETIES, RAJASTHAN WHEREIN IT WAS ME NTIONED THAT IT WILL BE CREATED FOR THE PRIMARY AGRICULTURAL LOAN SOCIETY A ND IT WAS CREATED FOR THE SALARY FUND ORGANISATION & MAINTENANCE. THE ASSESS ING OFFICER WAS OF THE VIEW THAT THE SURAKSHA FUND WAS NOT ANY RESERVE F OR THE EXPENDITURE TO INCREASE THE BANK PROFITABILITY AND THIS EXPENDITUR E DID NOT EXPEDITE TO INCREASE THE PROFITABILITY OF THE BANK. HE ACCORDI NGLY DISALLOWED THE AMOUNT OF RS.65,67,700/-. 5. THE ASSESSEE CARRIED THE MATTER TO THE LEARNED C IT(A) AND SUBMITTED THAT THE FUND WAS AN ESSENTIAL CREATION WHICH WAS A N EXPENDITURE ALLOWABLE U/S 37 OF THE ACT AS THE FUND HAD BEEN CREATED UNDE R THE DIRECTIONS OF APEX AUTHORITY. IT WAS FURTHER STATED THAT AS THE ASSES SEE BANK DID NOT HAVE ANY CONTROL OVER THE FUND, THE MONEY FALLS IN THE CATEG ORY OF THE MONEY SPENT WHOLLY AND EXCLUSIVELY AS IT HAS BEEN PROVIDED THAT THE ASSESSEE MAY TAKE LOAN FROM THIS FUND AND NOT SPEND IT. 6. THE LEARNED CIT(A), AFTER CONSIDERING THE SUBMIS SIONS OF THE ASSESSEE, OBSERVED THAT SUM OF RS. 65,67,700/- WAS CONSISTED OF PROVISION OF RS.58,00,000/- AND INTEREST OF RS.7,67,700/-. HE WAS OF THE VIEW THAT NO PROVISION WAS ALLOWABLE AS DEDUCTION U/S 37 OF A CT AND THAT THE SUM OF RS.7,67,700/- WAS AN INTEREST ACCRUING ON THE BALAN CE APPEARING IN THIS ACCOUNT FOR EARLIER PERIOD AND IT WAS NOT THE CASE OF THE ASSESSEE THAT THE SAID SUM OF RS.7,67,700/- HAD BEEN ACCOUNTED FOR AS INTEREST INCOME DURING THE CURRENT YEAR. THEREFORE, IT WAS NOT ALLOWABLE AS DEDUCTION. [5] ACCORDINGLY, THE LEARNED CIT(A) HELD THAT THE SUM OF RS.65,67,700/- WAS NOT ALLOWABLE AS DEDUCTION U/S 37 OF THE ACT AS IT WAS NOT AN EXPENDITURE BUT WAS A PROVISION CREATED BY OVERRIDING MANDATE F OR THE PURPOSE OF ENSURING SECURITY REGARDING FUND AVAILABLE FOR PAYM ENT OF SALARY IN FUTURE. HE ACCORDINGLY CONFIRMED THE ADDITION MADE BY THE A SSESSING OFFICER. 7. NOW THE ASSESSEE IS IN APPEAL. THE LEARNED COUN SEL FOR THE ASSESSEE, AT THE VERY OUTSET, STATED THAT THIS ISSUE IS COVER ED IN FAVOUR OF THE ASSESSEE VIDE ORDER DATED 19/02/2013 IN I.T.A. NO.3 51/JU/12 IN THE CASE OF THE SIROHI CENTRAL COOP. BANK LTD. JODHPUR VS. ACIT , CIRCLE-2, JODHPUR. COPY OF THE SAID ORDER WAS FURNISHED, WHICH IS PLAC ED AT PAGE NO. 147 TO 151 OF THE ASSESSEES COMPILATION. 8. IN HIS RIVAL SUBMISSIONS, THE LEARNED D.R. SUPP ORTED THE ORDERS OF THE AUTHORITIES BELOW. 9. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE P ARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. IT IS NOTICED THAT A SIMILAR ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE I N THE AFORESAID REFERRED TO ORDER DATED 19/02/2013. IN THE SAID ORDER, BY F OLLOWING THE ORDER DATED 22/07/2011 OF ITAT JAIPUR BENCH IN THE CASE OF ACIT V. RAJASTHAN STATE COOPERATIVE BANK LTD. IN I.T.A. NO.1277/JAIPUR/2010 FOR THE ASSESSMENT YEAR 2007-2008, THE ISSUE HAS BEEN DECIDED IN FAVOU R OF THE ASSESSEE AND THE RELEVANT FINDINGS HAVE BEEN GIVEN IN PARA 2.6 T O 2.8 OF THE SAID ORDER, WHICH READ AS UNDER: 2.6 AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE PARTIES AND THE MATERIALS AVAILABLE ON RECORD, IT IS NOTICE D THAT SIMILAR ISSUE HAS BEEN DECIDED BY THE COORDINATE BENCH IN T HE AFORESAID REFERRED TO CASE OF ACIT VS RAJASTHAN STA TE [6] COOPERATIVE BANK LTD., JAIPUR. IN THE SAID CASE ON SIMILAR ISSUE, THE ADDITION WAS DELETED BY THE LD. CIT(A) B Y OBSERVING AS UNDER:- 'ALLOWABILITY OF CONTRIBUTION BY THE APEX BANK FOR PAC MANGERS SALARY IS A STATUTORY LIABILITY WHICH IS CRYSTALLIZED AT THE END OF EVERY YEAR. THE CONTRIBU TION HOWEVER, ONCE MADE BECOME AT THE DISPOSAL OF REGISTRAR OF COOPERATIVE SOCIETY WHICH IS PAYABLE A S AND WHEN DEMANDED BY THE REGISTRAR COOPERATIVE SOCIETY ALONG WITH INTEREST ON IT. THUS, IT IS NOT CONTINGE NT LIABILITY BUT A STATUTORY LIABILITY WHICH IS CRYSTA LLIZED AT THE END OF EVERY YEAR AND HENCE THE LIABILITY IS ALLOWABLE.' 2.7 AGAINST THE SAID ORDER, THE DEPA RTMENT PREFERRED AN APPEAL IN ITA NO.1277/JP/2 010 WHEREIN VIDE ORDER DATED 22/07/2011, THE ORDER OF THE LD. C IT(A) WAS UPHELD BY OBSERVING IN PARA 3.6 OF THE SAID ORDER A S UNDER: 3.6 WE HAVE HEARD BOTH THE PARTIES. THE HON'BLE APEX COURT IN THE CASE OF SRI VENKATA SATYANARAYANA RICE MILL CONTRACTORS CO. VS CIT,223 ITR 101 HAS ST ATED THAT IT IS TO BE SEEN AS TO WHETHER THE PAYMENT IS COMPULSORY FOR THE ASSESSEE TO MAKE OR NOT BUT WHETHER IT WAS EXPENDED OUT OF CONSIDERATION OF COMMERCIAL EXPEDIENCY. ANY CONTRIBUTION MADE BY THE ASSESSEE TO A FUND WHICH DIRECTLY CONNECTED OR RELA TED TO CARRYING ON ASSESEE'S BUSINESS OR WHICH RESULTS IN BENEFIT TO THE ASSESEE'S BUSINESS HAS TO BE REGARDE D AS DEDUCTION ALLOWABLE U/S 37 OF THE ACT. THE DECISION OF HON'BLE APEX COURT IN THE CASE OF ASSOCIATED POWER CO. LTD. VS CIT (SUPRA) IS NOT APPLICABLE. THE HON'BLE APEX COURT HELD THAT APPLICATION OF THE DOCTRINE OF DIVE RSION OF INCOME BY REASON OF OVERRIDING TITLE IS NOT APPL ICABLE IN THAT CASE AS THE RESERVE IS OUT OF THE REVENUES OF THE UNDERTAKING AND REACH THE ELECTRICITY COMPANY AND I S NOT DIVERTED AWAY FROM IT. HOWEVER, IN THE INSTANT CASE, THE AMOUNT IS TO BE CONTRIBUTED TO A FUND AND THE F UND IS NOT BEING MANAGED BY THE ASSESSEE. THE ASSESSEE MAY BE TRUSTEE OF THAT FUND BUT IT CANNOT APPLY THE FUND [7] AS PER HIS OWN WILL. THE INTEREST, IF ANY, EARNED O N THIS FUND IS ALSO TO BE CREDITED TO THAT FUND, IT IS THE REFORE, CLEAR THAT FUNDS STAND DIVERTED AT THE SOURCE AND THEREFORE, THIS CANNOT BE CONSIDERED AS AN APPROPRI ATION OF INCOME BUT IT IS AN EXPENDITURE. THUS THE ID. CI T(A) WAS JUSTIFIED IN DELETING THE ADDITION.'' 2.8 SINCE THE FACTS OF THE PRESENT CASE ARE SIMILAR TO THE FACTS INVOLVED IN THE AFORESAID REFERRED TO CASE, S O RESPECTFULLY FOLLOWING THE ORDER DATED 22-07-2011 OF THE ITAT JA IPUR BENCH IN ITA NO.1277/JP/2010 FOR THE ASSESSMENT YE AR 2007- 08 IN THE CASE OF ACIT VS RAJASTHAN STATE COOPERATI VE BANK LTD. JAIPUR, THE ADDITION MADE BY THE AO AND SUSTAI NED BY THE LD. CIT(A) IS DELETED. 10. IN VIEW OF THE ABOVE DISCUSSION AND BY RESPECTF ULLY FOLLOWING THE AFORESAID REFERRED TO ORDER DATED 19 TH FEBRUARY, 2013 IN THE CASE OF THE SIROHI CENTRAL COOP. BANK LTD. JODHPUR VS. ACIT, CI RCLE-2, JODHPUR IN I.T.A. NO.351/JU/2012, THE ISSUE IS DECIDED IN FAVOUR OF T HE ASSESSEE. 11. THE NEXT ISSUE, VIDE GROUND NO. 2, 4 AND 5, REL ATES TO THE CONFIRMATION OF ADDITION OF RS.15,71,767/- MADE BY THE ASSESSING OFFICER BEING PREMIUM PAID TO LIC GROUP GRATUITY SCHEME. 12. THE FACTS RELATED TO THIS ISSUE, IN BRIEF, ARE THAT THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTICED THAT THE ASSESSEE HAD DEBITED A SUM OF RS.15,71,767/- AS GRATUITY FUND IN VESTMENT WITH LIC. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE FURNIS HED COPY OF LIC AND LETTER SENT BY THE I.T. DEPARTMENT ON 10/03/98 BUT NO APPROVAL OF THIS FUND WAS PRODUCED. THE ASSESSING OFFICER WAS OF THE VIE W THAT IT WAS NOT ALLOWABLE EXPENDITURE AS PER THE PROVISIONS OF I.T. ACT. HE, THEREFORE, DISALLOWED RS.15,71,767/- AND ADDED THE SAME TO THE DECLARED INCOME OF THE ASSESSEE. [8] 13. THE ASSESSEE CARRIED THE MATTER TO THE LEARNED CIT(A) AND SUBMITTED THAT THE ASSESSING OFFICER HAD WRONGLY OBSERVED THA T THERE WAS ANY GRATUITY FUND INVESTMENT. IT WAS CLARIFIED THAT THE ASSESSE E WAS A POLICY HOLDER OF LIC AND WAS A MEMBER OF GROUP GRATUITY SCHEME IN W HICH THE SUM OF RS.15,71,767/- WAS PAID AS A PREMIUM FOR WHICH THE CLAIM OF DEDUCTION HAS BEEN MADE, WHICH WAS DEDUCTIBLE. IT WAS FURTHER ST ATED THAT THE LIC HAD MADE PAYMENT OF R.17,85,244/- DURING THE YEAR TO TH E STAFF MEMBERS WHO HAD RETIRED, THEREFORE, EITHER THE PREMIUM PAID OR THE ACTUAL PAYMENT MADE TO THE STAFF MEMBERS BE ALLOWED AS DEDUCTION AS THE EXPENDITURE INCURRED WAS WHOLLY AND EXCLUSIVELY FOR THE BUSINESS PURPOSE . 13.1 THE LEARNED CIT(A), AFTER CONSIDERING THE SUBM ISSIONS OF THE ASSESSEE, OBSERVED THAT A SUM OF RS.15,71,767/- WA S A PREMIUM PAID TO LIC TOWARDS THE FUND CREATED AS PER GROUP GRATUITY SCHEME OUT OF WHICH PAYMENT OF GRATUITY TO THE RETIRING EMPLOYEES WERE MADE. THE LEARNED CIT(A) FURTHER OBSERVED THAT THIS FUND WAS NOTHING BUT AN INVESTMENT FOR ACCUMULATION OF FUND FOR THE PURPOSE OF MEETING OUT ASSESSEE'S LIABILITIES TOWARDS GRATUITY PAYABLE TO ITS EMPLOYEES RETIRING IN FUTURE AND THAT ANY DEDUCTION IN RESPECT OF LIABILITY TOWARDS GRATUITY WAS GOVERNED BY THE PROVISIONS OF SECTION 36(V) OF THE ACT WHICH LAYS D OWN THE CONDITION OF SUCH GRATUITY FUND HAVING BEEN APPROVED AND SINCE IN THE INSTANT CASE, THE APPELLANT HAS NOT BEEN ABLE TO ESTABLISH THAT THE F UND HAD BEEN APPROVED AS REQUIRED UNDER THE PROVISIONS OF SECTION 36(V) T HE ACT, THEREFORE, ANY PAYMENT TO SUCH FUND COULD NOT BE ALLOWED AS DEDUCT ION. HE ALSO OBSERVED THAT THE PAYMENT OF RS.15,71,767/- COULD NOT BE TRE ATED AS ASSESSEE'S EXPENDITURE AS THE PAYMENT HAD NOT BEEN MADE TOWARD S ANY LIABILITY THAT HAD ALREADY ARISEN AND ACCRUED AS THE PAYMENT HAD B EEN MADE WITH THE [9] INTEND TO AND FOR THE PURPOSE OF CREATION OF THE FU ND OUT OF WHICH FUTURE LIABILITY ARISING ON ACCOUNT OF PAYMENT OF GRATUITY TO RETIRING EMPLOYEES SHALL BE MET. AS REGARDS TO THE ASSESSEES CONTENTION TH AT THE SAID AMOUNT WAS A PREMIUM PAID TO LIC, THE LEARNED CIT(A) OBSERVED THAT THE DEDUCTION IN RESPECT OF ANY AMOUNT OF PREMIUM WAS GOVERNED BY TH E PROVISIONS OF SECTION 36(I), (IA) & (IB) AND THE PAYMENT MADE BY THE ASSESSEE WAS NOT COVERED BY ANY OF THE ABOVE PROVISIONS. HE ACCORDI NGLY CONFIRMED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. 14. NOW THE ASSESSEE IS IN APPEAL. THE LEARNED COU NSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORIT IES BELOW AND FURTHER STATED THAT THIS ISSUE IS COVERED BY THE JUDGMENT O F HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. BITONI LA MPS LTD. [2005] 277 ITR 396 (P&H) AND THE DECISION DATED 11/08/2010 OF ITAT JODHPUR BENCH IN I.T.A. NO.368/JU/2010 IN THE CASE OF THE JALORE SIR OHI ZILA DUGDH UTPADAK SAHAKARI SANGH LTD. VS. ACIT. COPY OF THE SAID ORD ER WAS FURNISHED, WHICH IS PLACED AT PAGE NO. 152 TO 154 OF THE ASSESSEES COMPILATION. 15. IN HIS RIVAL SUBMISSIONS THE LEARNED D.R. STRO NGLY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 16. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. IN THE INSTANT CASE IT APPEARS THAT THE DISALLOWANCE WAS MADE BY THE ASSES SING OFFICER FOR THE REASON THAT THE APPROVAL OF THIS FUND WAS NOT FURNI SHED. IT IS NOTICED THAT THE ASSESSEE VIDE LETTER DATED 17/11/2012 WRITTEN T O THE CIT-II, JODHPUR ASKED ABOUT THE APPROVAL WHICH WAS APPLIED ON 23/04 /97 (COPY OF THE LETTER IS PLACED ON RECORD) BUT IT IS NOT YET CLEAR AS TO WHETHER THE ASSESSEE GOT [10] THE APPROVAL. IT IS ALSO RELEVANT TO POINT OUT T HAT IN THE DECISION OF THE ITAT JODHPUR BENCH DATED 11/08/2010, THE APPROVAL W AS AVAILABLE WITH THE ASSESSEE AS MENTIONED IN PARA 5 OF THE SAID ORDER D ATED 11/08/2010. WE, THEREFORE, DEEM IT APPROPRIATE TO SET ASIDE THIS IS SUE TO THE FILE OF THE ASSESSING OFFICER TO BE DECIDED AFRESH IN ACCORDANC E WITH LAW AFTER PROVIDING DUE AND REASONABLE OPPORTUNITY OF BEING H EARD AND KEEPING IN VIEW THE RATIO LAID DOWN BY THE HON'BLE PUNJAB & HA RYANA HIGH COURT IN THE CASE OF CIT VS. BITONI LAMPS LTD. 277 ITR 396 RELIE D BY THE LEARNED COUNSEL FOR THE ASSESSEE. 17. THE NEXT ISSUE, VIDE GROUND NO. 3, RELATES TO T HE CONFIRMATION OF ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT O F PREMIUM PAID FOR LEAVE ENCASHMENT GROUP SCHEME. 18. THE FACTS RELATED TO THIS ISSUE, IN BRIEF, ARE THAT THE ASSESSING OFFICER ON ANALYZING THE PROFIT & LOSS ACCOUNT FURNISHED BY THE ASSESSEE FOUND THAT THE ASSESSEE HAD DEBITED A SUM OF RS.28,17,236/- AS LEAVE ENCASHMENT WHICH WAS PAID TO THE LIC. THE ASSESSING OFFICER W AS OF THE VIEW THAT THE SAID EXPENDITURE WAS ALLOWABLE ONLY ON THE ACTUAL P AYMENT. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD NOT PRODUCED THE EVIDENCE OF ACTUAL PAYMENT. HE, THEREFORE, DISALLOWED THE SAME AND AD DED TO THE INCOME OF THE ASSESSEE. 19. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTE R TO THE LEARNED CIT(A) AND SUBMITTED THAT THE ASSESSEE HAD INCURRED AN EXPENDITURE OF RS.28,17,236/- FOR PAYMENT OF PREMIUM FOR LEAVE ENC ASHMENT SCHEME OF LIC WHICH WAS EXPENDITURE AS THE SAME WAS NOT REFUN DABLE. IT WAS FURTHER STATED THAT THE ACTUAL PAYMENT ON ACCOUNT OF LEAVE ENCASHMENT TO THE [11] EMPLOYEES ENTITLED TO IT WAS RS.12,34,542/-. IT WA S FURTHER STATED THAT BOTH THE PREMIUM PAID AS ALSO THE ACTUAL PAYMENT ARE ALL OWABLE AS EXPENSES. 19.1 THE LEARNED CIT(A), AFTER CONSIDERING THE SUBM ISSIONS OF THE ASSESSEE, OBSERVED THAT THE PAYMENT OF RS.28,17,23 6/- WAS FOR THE PURPOSE OF CREATION OF FUND TO ACCUMULATE FUND OUT OF WHICH PAYMENT TOWARDS LIABILITY ARISING IN FUTURE ON ACCOUNT OF L EAVE ENCASHMENT ENTITLEMENT OF THE EMPLOYEES WERE TO BE MET. THERE FORE, THE PAYMENT COULD NOT BE TREATED AS EXPENDITURE AS SUCH PAYMENT WAS NOT AGAINST ANY LIABILITY THAT COULD BE SAID TO HAVE ALREADY ARISEN OR ACCRUED DURING THE CURRENT YEAR. AS REGARDS TO THE CONTENTION OF THE ASSESSEE THAT A SUM OF RS.12,34,542/- WAS THE ACTUAL PAYMENT MADE BY THE L IC TO THE EMPLOYEES OF THE ASSESSEE, THE LEARNED CIT(A) OBSERVED THAT NO SUCH CONTENTION HAD BEEN RAISED BEFORE THE ASSESSING OFFICER. THE LEAR NED CIT(A) ACCORDINGLY CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICE R. 20. NOW THE ASSESSEE IS IN APPEAL. THE LEARNED COU NSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORIT IES BELOW AND FURTHER SUBMITTED THAT THE ISSUE IS SQUARELY COVERED IN FAV OUR OF THE ASSESSEE BY THE DECISION DATED 19/02/2013 OF THIS BENCH OF THE TRIBUNAL IN I.T.A. NO.351/JU/12 IN THE CASE OF THE SIROHI CENTRAL COOP . BANK LTD. JODHPUR VS. ACIT, CIRCLE-2, JODHPUR. COPY OF THE SAID ORDER WA S FURNISHED, WHICH IS PLACED AT PAGE NO. 147 TO 151 OF THE ASSESSEES COM PILATION. 21. IN HIS RIVAL SUBMISSIONS THE LEARNED D.R. STRO NGLY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 22. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. IT IS NOTICED THAT A SIMILAR [12] ISSUE HAVING IDENTICAL FACTS HAS BEEN DECIDED BY TH IS BENCH OF THE TRIBUNAL VIDE ORDER DATED 19/02/2013 IN THE CASE OF THE SIRO HI CENTRAL COOP. BANK LTD. JODHPUR (SUPRA) AND THE RELEVANT FINDINGS HAVE BEEN GIVEN IN PARA 3.7 & 3.8 OF THE SAID ORDER DATED 19/02/2013 WHICH READ AS UNDER: 3.7 AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE PARTIES AND THE MATERIALS AVAILABLE ON RECORD, IT IS NOTICE D THAT ON THE SIMILAR ISSUE THE HON'BLE KERALA HIGH COURT IN THE CASE OF CIT VS. HINDUSTAN LATEX LTD. (SUPRA) HAS HELD AS UNDER: - 'LEAVE ENCASHMENT IS NOT A STATUTORY LIABILITY AND EVEN IN THE CASE OF PROVISION BEING MADE THE DEDUCTION W AS ALLOWED AS BUSINESS EXPENDITURE, WHEN THE LIABILITY WAS NOT ACTUALLY INCURRED IN THE PREVIOUS YEAR. IT WAS NOT A PROVISION WHICH WAS DISOWNED BUT AN ACTUAL LIABILIT Y TOWARDS PREMIUM PAID ON INSURANCE POLICY AND THE LIABILITY WAS ALLOWABLE AS A DEDUCTION U/S 37 BEING AN EXPENDITURE INCURRED FOR THE PURPOSE OF BUSINESS. T HE CIT PROCEEDED ON A TOTALLY WRONG PREMISE IN FINDING THE CLAIM TO BE ONLY U/S 43B(F) AND THEN DISALLOWING IT . THE ORDER OF AO ALLOWING DEDUCTION TO ASSESSEE IN THE C ASE OF PREMIUM PAID TOWARDS THE VALID INSURANCE POLICY, ENSURING THE SATISFACTION OF LIABILITY FOR LEAVE ENCASHMENT BY THE INSURER CANNOT BE HELD TO BE ERRONEOUS AND WAS NOT LIABLE TO BE REVISED U/S 263 FOR THE REASON OF BEING PREJUDICIAL TO THE REVENUE. 3.8 FROM THE RATIO LAID DOWN BY THE HON'BLE KERALA HIGH COURT IN THE AFORESAID REFERRED TO CASE, IT IS CLEA R THAT ACTUAL LIABILITY TOWARDS PREMIUM PAID ON INSURANCE POLICY IS AN ALLOWABLE DEDUCTION U/S 37 OF THE ACT BEING THE EXP ENDITURE INCURRED FOR THE PURPOSE OF BUSINESS. IN VIEW OF TH AT, WE SET ASIDE THE IMPUGNED ORDER OF THE ID. CIT(A) ON THIS ISSUE AND DIRECT THE AO TO ALLOW THE CLAIM OF THE ASSESSEE. 22.1 SO RESPECTFULLY FOLLOWING THE EARLIER ORDER DA TED 19/02/2013 OF THIS BENCH OF THE TRIBUNAL, WE ARE OF THE VIEW THAT THE CIT(A) WAS NOT JUSTIFIED [13] IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER F OR MAKING THE IMPUGNED ADDITION. WE, THEREFORE, DELETE THE SAME. 23. THE ANOTHER ISSUE, VIDE GROUND NO. 6, RELATES T O THE CHARGING OF INTEREST U/S 234A, 234B AND 234C OF THE ACT. REGAR DING THIS ISSUE, IT WAS THE COMMON CONTENTION OF BOTH THE PARTIES THAT IT I S CONSEQUENTIAL IN NATURE. WE ORDER ACCORDINGLY. 24. IN OTHERS APPEALS I.E. I.T.A. NO.12/JODH/2011 A ND 378/JODH/2012 FOR THE ASSESSMENT YEARS 2008-09 AND 2009-10 RESPECTIVE LY, THE SIMILAR GROUNDS HAVING SAME ISSUES HAVE BEEN RAISED. THE O NLY DIFFERENCE IS IN THE FIGURES INVOLVED. THEREFORE, OUR FINDING GIVEN IN T HE FORMER PART OF THIS ORDER IN I.T.A. NO.212/JODH/2010 FOR THE ASSESSMENT YEAR 2007-2008 SHALL APPLY MUTATIS-MUTANDIS. 25. IN THE RESULT, THE APPEALS FILED BY THE ASSESSE E ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. (ORDER PRONOUNCED IN THE OPEN COURT ON 15/07/2013) SD/. SD/. ( HARI OM MARATHA ) ( N. K. SAINI ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED:15/07/2013 *CL SINGH COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. D.R. ASSISTANT REGISTRAR