M/s Jotindra Steel & tube Ltd., New Delhi V. ACIT, New Delhi

ITA 2277/DEL/2013

• Counselvise Citation: 227720114 RSA 2013
• Duration Of Justice: 1 year(s) 9 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-01-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 20-01-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 18-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P DAMKAUNAJMA SENIOR
• Keywords: Valuation report
• Section: 43B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH D : NEW DELHI) BEFORE SHRI I.C. SUDHIR, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO.2277 /DEL./2013 ASSESSMENT YEAR : 2009-10 M/S. JOTINDRA STEEL & TUBE LTD., VS. ACIT, RANGE 4 , 602, CHIRANJIV TOWER, NEW DELHI. 43, NEHRU PLACE, NEW DELHI 110 019. (PAN : AAACH1872C) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI VED JAIN, ADVOCATE & MS. RANO J AIN, CA REVENUE BY : SHRI P. DAMKAUNAJMA, SENIOR DR ORDER PER B.C. MEENA, ACCOUNTANT MEMBER : THIS APPEAL FILED BY THE ASSESSEE EMANATES FROM THE ORDER OF THE CIT (APPEALS)-VIII, NEW DELHI DATED 17.01.2013 FOR THE ASSESSMENT YEAR 2009- 10. 2. THE RETURN OF INCOME WAS FILED ON 30.09.2009 DEC LARING INCOME AT RS.2,78,52,373/-. THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADING OF STEEL TUBES AND PIPES AND ERECTION, FABRICATION WORK AND DEALING IN SHARES AND SECURITI ES AND FURNACE UNIT. 3. THE ASSESSEE IS IN APPEAL BY TAKING THE FOLLOWIN G GROUNDS OF APPEAL:- ITA NO.2277/DEL./2013 2 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (A PPEALS) [CIT(A)] IS BAD, BOTH IN THE EYE OF LAW AND ON FACT S. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED, BOTH ON FACTS AND IN LAW, IN CONF IRMING THE DISALLOWANCE OF AN AMOUNT OF RS.37,22,832/- ON ACCO UNT OF SERVICE TAX, MADE BY THE AO BY INVOKING THE PROVISI ON OF SECTION 438 OF THE ACT. 3(I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, T HE LEARNED CIT(A) HAS ERRED, BOTH ON FACTS AND IN LAW, IN CONF IRMING THE DISALLOWANCE OF AN AMOUNT OF RS.10,32, 133/- ON ACC OUNT OF INSPECTION CHARGES, MADE BY THE AO BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. (II) THAT THE ABOVE SAID DISALLOWANCE HAS BEEN MAD E DESPITE THE FACT THAT THE PAYMENT OF THE TAX DEDUCT ED AT SOURCE HAS BEEN MADE BEFORE THE DUE DATE OF FILING RETURN. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED, BOTH ON FACTS AND IN LAW, IN CONF IRMING THE DISALLOWANCE OF AN AMOUNT OF RS.5,83,999/- ON ACCOU NT OF SUM PAYABLE IN LIEU OF LEAVES AT THE CREDIT OF EMPLOYEE S, MADE BY THE AO BY INVOKING THE PROVISION OF SECTION 438 OF THE ACT. 5. THAT THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTER ANY OF THE GROUNDS APPEAL. 4. GROUND NOS.1 & 5 ARE GENERAL IN NATURE AND DO NO T REQUIRE ANY ADJUDICATION. 5. IN THE GROUND NO.2, THE ISSUE INVOLVED IS REGARD ING CONFIRMING THE DISALLOWANCE OF AN AMOUNT OF RS.37,22,832/- ON ACCO UNT OF SERVICE TAX MADE BY THE ASSESSING OFFICER BY INVOKING THE PROVI SIONS OF SECTION 43B OF THE INCOME-TAX ACT, 1961. ITA NO.2277/DEL./2013 3 6. AT THE OUTSET OF THE HEARING, LD. AR SUBMITTED T HAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION O F ITAT, LUCKNOW BENCH IN THE CASE OF ACIT-4, KANPUR VS. M/S. LOHIA STARLINGER LTD. REPORTED IN 2014 (10) TMI 700 ITAT (LUCKNOW). H E ALSO PLEADED THAT THE ISSUE IS ALSO COVERED BY THE DECISION OF ITAT, MUMBAI BENCH IN THE CASE OF THE WEST COAST PAPER MILLS LTD. & ORS. VS. ADDL.CIT REPORTED IN 2014 (7) TMI 554 ITAT (MUMBAI). 7. WE HAVE HEARD BOTH THE SIDES ON THE ISSUE. THE FACTS INVOLVED IN THE DECISIONS OF COORDINATE BENCHES WERE THE SAME AS IN THE ASSESSEES CASE. IN THE CASE OF ACIT VS. M/S. LOHIA STARLINGER LTD., CITED SUPRA, THE ITAT, LUCKNOW BENCH HAS HELD AS UNDER :- '20. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE F IND THAT IT IS NOTED BY CIT(AJ IN PARA 7.4 OF HIS ORDER THAT THE PAYMENT OF RS.35,44,195/- HAS BEEN DONE THROUGH THE CENVAT DEPOSIT ACCOUNT BEFORE DUE DATE OF FILING OF RETURN OF INCOME. IT WAS HELD BY CIT (A) THAT THIS IS ACTUAL PAYMENT AND THEREFORE, ALLOWABLE U/S 438 BECAUSE IT WAS PAID BE FORE DUE DATE OF FILING OF RETURN OF INCOME. THE OBJECTION OF THE REVENUE IS THAT PAYMENT OF CENVAT DEPOSIT IS NOT AC TUAL PAYMENT. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT (A) BECAUSE IN OUR CONSIDERED OPINION ALSO, PAYMENT THR OUGH CENVAT OR THROUGH PLA BOTH ARE ACTUAL PAYMENTS AND THEREFORE, BOTH ARE ALLOWABLE IF THE SAME HAS BEEN PAID BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME. IF PAYM ENT BY WAY OF CENVET IS NOT ACTUAL PAYMENT AS PER THE A. O. T, EN E SHOULD HAVE ADDED ALL SUCH PAYMENTS ALSO WHICH WERE PAID DURING THE YEAR BUT HE HAS ADDED ONLY THOSE SUCH PA YMENTS WHICH WERE MADE AFTER 31 ST MARCH BUT BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME. IT SHOWS THAT EVEN THE A. O. DID NOT CONSIDER ALL SUCH PAYMENTS AS NOT ACTUAL PAYMENTS. THIS IS NOT THE OBJECTION OF THE REVENUE THAT THIS PAYMENT WAS NOT MADE BEFORE DUE DATE OF FILING OF RETURN OF INCOME AND T HEREFORE, WE ITA NO.2277/DEL./2013 4 DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF CIT(A) ON THIS ISSUE. THIS GROUND OF THE REVENUE IS REJECTED. ' SINCE THE ISSUE AND FACTS ARE SAME, THEREFORE, WE F IND THAT THE ISSUE IS COVERED BY THE DECISIONS OF COORDINATE BENCHES OF I TAT, CITED SUPRA, RELIED UPON BY THE ASSESSEE AND ACCORDINGLY, WE ALL OW THIS GROUND OF ASSESSEES APPEAL. 8. IN THE GROUND NO.3, THE ISSUE INVOLVED IS REGARD ING CONFIRMING THE DISALLOWANCE OF RS.10,32,133/- ON ACCOUNT OF INSPEC TION CHARGES MADE BY THE ASSESSING OFFICER BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. 9. AT THE OUTSET OF THE HEARING, LD. AR SUBMITTED T HAT THERE IS AN AMENDMENT MADE BY THE FINANCE ACT, 2012 AND THE DIS ALLOWANCE IS NOT SUSTAINABLE IN VIEW OF THIS AMENDMENT. HE SUBMITTE D THAT A PROVISO HAS BEEN INSERTED WHICH READ AS UNDER :- 'PROVIDED FURTHER THAT WHERE AN ASSESSEE FAILS TO D EDUCT THE WHOLE OR ANY PART OF THE TAX IN ACCORDANCE WITH THE PROVISIONS OF CHAPTER XVII-8 ON ANY SUCH SUM BUT IS NOT DEEMED TO BE AN ASSESSEE IN DEFAULT UNDER THE FIRST PROVISO TO SUB- SECTION (1) OF SECTION 201, THEN, FOR THE PURPOSE OF THIS SUB-CLAU SE, IT SHALL BE DEEMED THAT THE ASSESSEE HAS DEDUCTED AND PAID THE TAX ON SUCH SUM ON THE DATE OF FURNISHING OF RETURN OF INCOME B Y THE RESIDENT PAYEE REFERRED TO IN THE SAID PROVISO.' HE PLEADED THAT CORRESPONDING AMENDMENT HAS BEEN MA DE IN SECTION 201(1), WHICH ALSO READ AS UNDER :- 'PROVIDED THAT ANY PERSON, INCLUDING THE PRINCIPAL OFFICER OF A COMPANY, WHO FAILS TO DEDUCT THE WHOLE OR ANY PART OF THE TAX ITA NO.2277/DEL./2013 5 IN ACCORDANCE WITH THE PROVISIONS OF THIS CHAPTER O N THE SUM PAID TO A RESIDENT OR ON THE SUM CREDITED TO THE AC COUNT OF A RESIDENT SHALL NOT BE DEEMED TO BE AN ASSESSEE IN D EFAULT IN RESPECT OF SUCH TAX IF SUCH RESIDENT- (I) HAS FURNISHED HIS RETURN OF INCOME UNDER SECTION 13 9; (II) HAS TAKEN INTO ACCOUNT SUCH SUM FOR COMPUTING INCOM E IN SUCH RETURN OF INCOME; AND (III) HAS PAID THE TAX DUE ON THE INCOME DECLARED BY HIM IN SUCH RETURN OF INCOME. AND THE PERSON FURNISHES A CERTIFICATE TO THIS EFFE CT FROM AN ACCOUNTANT IN SUCH FORM AS MAY BE PRESCRIBED.' HE PLEADED THAT CUMULATIVE IMPACT OF THIS AMENDMENT IS THAT IN CASE, THE DEDUCTEE HAS INCLUDED THE AMOUNT OF WHICH TDS WAS D EDUCTIBLE WHILE COMPUTING ITS INCOME AND HAS FILED THE RETURN AND P AID THE TAXES THEREON THEN THE DEDUCTOR IS NOT CONSIDERED TO BE AN ASSESS EE IN DEFAULT AND CONSEQUENTLY, NO DISALLOWANCE CAN BE MADE U/S 40(A) (IA). HE ALSO PLEADED THAT THE DEDUCTEE IS M/S. UL INDIA LTD. THE ASSESS EE COULD NOT PROVIDE NECESSARY CERTIFICATE DURING THE ASSESSMENT AND HE PLEADED TO RESTORE THE ISSUE TO ASSESSING OFFICER FOR NECESSARY VERIFICATI ON. LD. AR ALSO PLACED RELIANCE ON VARIOUS JUDGMENTS WHICH ARE AS UNDER :- (I) ITO VS. GAURIMAL MAHAJAN & SONS - ITA NO.1852/PN/2 012 DATED 6.1.2014 (ITAT, PUNE BENCHES) (II) SEA FOOD PARK INDIA LTD VS. CIT - ITA NO.762/COCH/2013 DATED 31.3.2014 (ITAT, COCHIN BENC H) (III) DCIT VS. ENTRACO POWERS SYSTEMS PVT. LTD. - ITA NO.1039/PN/2012 DATED 30.4.2014 (ITAT, PUNE BENCHES ) ITA NO.2277/DEL./2013 6 (IV) SATISH CHAND AGARWAL VS. JCIT - ITA NO.339/AGRA/20 13 DATED 29.5.2014 (ITAT, AGRA BENCH) (V) DCIT VS. ANSAL LANDMARK TOWNSHIPS PVT. LTD. - ITA NOS.2859, 2972 & 877/DEL12013 DATED 22.7.2014 (ITAT DELHI BENCHES) (VI) ITO VS. DR JAIDEEP KUMAR SHARMA - ITA NOS.3893, 5696/DEL/2011 DATED 25-7-2014 (ITAT DELHI BENCHES) (VII) SHRI G SHANKAR VS. ACIT ITA NO.1832/BANG/2013 DATED 10.10.2014 (ITAT BANGALORE BENCHES) (VIII) DCIT VS JAIPUR VIDYUT VITRAN NIGAM LTD ITA NO.224/JP/2014 DATED 21.11.2014 (ITAT JAIPUR BENCH) 10. LD. DR WAS ALSO HAVING NO OBJECTION FOR SETTING ASIDE THE ISSUE TO THE ASSESSING OFFICER. 11. AFTER HEARING BOTH THE SIDES, WE FIND IT APPROP RIATE IN THE INTEREST OF JUSTICE TO RESTORE THE WHOLE ISSUE TO THE FILE OF T HE ASSESSING OFFICER TO BE DECIDED DE NOVO AS PER LAW. WE ORDER ACCORDINGLY. THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES. 12. IN THE GROUND NO.4, THE ISSUE INVOLVED IS SUSTA INING THE ADDITION OF RS.5,83,999/- ON ACCOUNT OF SUM PAYABLE IN LIEU OF LEAVE AT THE CREDIT OF EMPLOYEES. 13. AT THE OUTSET OF THE HEARING, LD. AR SUBMITTED THAT SIMILAR ISSUE HAS BEEN CONSIDERED BY THE ITAT, CHENNAI BENCH IN THE C ASE OF INDIAN OVERSEAS BANK, ACCOUNTS DEPARTMENT VS. ADDL.CIT REP ORTED IN 2014 (2) TMI 930 ITAT (CHENNAI) WHILE DECIDING ITA NOS.99/ MDS/2010 & ORS. ITA NO.2277/DEL./2013 7 DATED 19.03.2013. HE ALSO SUBMITTED THAT THE ISSUE IS ALSO COVERED BY THE DECISION OF ITAT, MUMBAI BENCH IN THE CASE OF ADITY A BIRLA NUVO LTD. (FORMERLY KNOWN AS INDIAN RAYON AND INDUSTRIES LTD. ) VS. DCIT REPORTED IN 2014 (10) TMI 154 ITAT (MUMBAI). HE ALSO RELI ED ON THE DECISION OF ITAT, AHMEDABAD IN THE CASE OF M/S. SIEMENS HEALTHC ARE DIAGNOSTICS LTD. VS. ACIT REPORTED IN 2014 (12) TMI 892 ITAT (AHMEDABAD). 14. WE HAVE HEARD BOTH THE SIDES ON THE ISSUE. ITA T, CHENNAI BENCH IN THE CASE OF INDIAN OVERSEAS BANK, ACCOUNTS DEPARTME NT, CITED SUPRA, HAS HELD AS UNDER :- '22. IN THE PRESENT CASE, THE ASSESSEE HAS CREATED PROVISIONS FOR LEAVE ENCASHMENT OF RS.27.68 CRORES. THE LEARNE D AR HAS RELIED ON THE JUDGEMENT OF THE HON'BLE CALCUTTA HIG H COURT IN THE CASE OF EXIDE INDUSTRIES LTD. (SUPRA) WHEREIN T HE HON'BLE COURT HAS STRUCK DOWN THE PROVISIONS OF SUB-CLAUSE (F) OF SECTION 43B. THE HON'BLE SUPREME COURT OF INDIA IN THE CASE OF BHARAT EARTH MOVERS LTD. VS. CIT REPORTED AS 245 ITR 428 ANSWERING TO THE QUESTION: 'WHETHER, ON THE FACTS A ND IN THE CIRCUMSTANCES OF THE CASE, THE PROVISION FOR MEETIN G THE LIABILITY FOR ENCASHMENT OF EARNED LEAVE BY THE EMP LOYEE IS ADMISSIBLE DEDUCTION?' HELD AS UNDER:- A FEW PRINCIPLES WERE LAID DOWN BY THIS COURT, THE RELEVANT OF WHICH FOR OUR PURPOSE ARE EXTRACTED AND REPRODUCED AS UNDER : (I) FOR AN ASSESSEE MAINTAINING HIS ACCOUNTS ON THE MERCANTILE SYSTEM, A LIABILITY ALREADY ACCRUED, THO UGH TO BE DISCHARGED AT A FUTURE DATE, WOULD BE A PROPER DEDU CTION WHILE WORKING OUT THE PROFITS AND GAINS OF HIS BUSINESS, REGARD BEING HAD TO THE ACCEPTED PRINCIPLES OF COMMERCIAL PRACTI CE AND ACCOUNTANCY. IT IS NOT AS IF SUCH DEDUCTION IS PERM ISSIBLE ONLY IN THE CASE OF AMOUNTS ACTUALLY EXPENDED OR PAID; (II) JUST AS RECEIPTS, THOUGH NOT ACTUAL RECEIPTS B UT ACCRUED DUE ARE BROUGHT IN FOR INCOME-TAX ASSESSMENT, SO AL SO ITA NO.2277/DEL./2013 8 LIABILITIES ACCRUED DUE WOULD BE TAKEN INTO ACCOUNT WHILE WORKING OUT THE PROFITS AND GAINS OF THE BUSINESS; (III) A CONDITION SUBSEQUENT, THE FULFILMENT OF WHI CH MAY RESULT IN THE REDUCTION OR EVEN EXTINCTION OF THE L IABILITY, WOULD NOT HAVE THE EFFECT OF CONVERTING THAT LIABILITY IN TO A CONTINGENT LIABILITY; (IV) A TRADER COMPUTING HIS TAXABLE PROFITS FOR A P ARTICULAR YEAR MAY PROPERLY DEDUCT NOT ONLY THE PAYMENTS ACTU ALLY MADE TO HIS EMPLOYEES BUT ALSO THE PRESENT VALUE OF ANY PAYMENTS IN RESPECT OF THEIR SERVICES IN THAT YEAR TO BE MADE I N A SUBSEQUENT YEAR IF IT CAN BE SATISFACTORILY ESTIMATED. SO IS THE VIEW TAKEN IN CALCUTTA CO. LTD. V. CIT [1 959J 37 ITR 1 (SC) WHEREIN THIS COURT HAS HELD THAT THE LIABILI TY ON THE ASSESSEE HAVING BEEN IMPORTED, THE LIABILITY WOULD BE AN ACCRUED LIABILITY AND WOULD NOT CONVERT INTO A COND ITIONAL ONE MERELY BECAUSE THE LIABILITY WAS TO BE DIS- CHARGED AT A FUTURE DATE. THERE MAY BE SOME DIFFICULTY IN THE ESTIMATIO N THEREOF BUT THAT WOULD NOT CONVERT THE ACCRUED LIABILITY IN TO A CONDITIONAL ONE ; IT WAS ALWAYS OPEN TO THE TAX AUT HORITIES CONCERNED TO ARRIVE AT A PROPER ESTIMATE OF THE LIA BILITY HAVING REGARD TO ALL THE CIRCUMSTANCES OF THE CASE. APPLYI NG 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 LEAV E 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 AP PLICABLE ON THE RELEVANT DATE, IS ENTITLED TO DEDUCTION OUT OF THE GROSS RECEIPTS FOR THE ACCOUNTING YEAR DURING WHICH THE P ROVISION IS MADE FOR THE LIABILITY. THE LIABILITY IS NOT A CONT INGENT LIABILITY. THE HIGH COURT WAS NOT RIGHT IN TAKING THE VIEW TO THE CONTRARY. THE APPEAL IS ALLOWED. THE JUDGMENT UNDER APPEAL IS SET ASIDE. THE QUESTION REFERRED BY THE TRIBUNAL TO THE HIGH C OURT IS ANSWERED IN THE AFFIRMATIVE, I.E., IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE.' THE HON'BLE MADRAS HIGH COURT FOLLOWING THE JUDGEME NT OF THE HON'BLE SUPREME COURT OF INDIA, DISMISSED THE A PPEAL OF ITA NO.2277/DEL./2013 9 THE REVENUE IN THE CASE OF CIT VS. PANASONIC HOME APPLIANCES REPORTED AS 323 ITR 344 WHEREIN SIMILAR QUESTION WAS INVOLVED. IN VIEW OF THE RATIO LAID DOWN IN THE ABOVE JUDGMEN TS, THIS GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED.' ITAT, MUMBAI BENCH IN THE CASE OF ADITYA BIRLA NUVO LTD., CITED SUPRA, HAS DECIDED THE ISSUE AS UNDER :- '4. GROUND NO. 4 DEALS WITH DISALLOWANCE OF RS.1.73 CRORES, MADE U/S. 43B(F) OF THE ACT, BEING PROVISIO N MADE FOR LEAVE SALARY. WE FIND THAT SIMILAR ISSUE HAD ARISEN IN THE AY 2002-03, 2003-04, 2004-05 AND 2005-06 ALSO. WHILE D ECIDING THE APPEAL FOR THE LAST THREE AY. S. , THE TRIBUNAL HAD DEALT THE ISSUE AS UNDER : 4. SECOND COMMON GROUND IS ABOUT DISALLOWANCE OF PROVISIONS MADE FOR THE LEAVE SALARY U/S.43F OF THE ACT AND THE AMOUNT INVOLVED ARE RS.2.48 CRORES, RS.1.76 ORES AN D RS.2.6 CRORES. DURING THE COURSE OF HEARING BEFORE US, REP RESENTATIVES OF BOTH THE SIDES CONCEDED THAT ISSUE WAS DECIDED B Y THE TRIBUNAL IN THE YEAR 2002-03 (SUPRA). 4.1. WE FIND THAT TRIBUNAL IN ITS ORDER HAS DECIDED THE ISSUE AS UNDER: '15. 7. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE CLAIM OF THE ASSESSEE VIS -A-VIS SEC. 43B(F). A PERUSAL OF SEC. 43B(F) SHOWS THAT THE EXP LANATION TO SEC. 43B REFERRING TO THE AMENDMENT OF THE WORD ANY SUM PAYABLE IS APPLICABLE ONLY FOR CLAUSE (A) OF SEC. 4 3B WHICH MEANS THAT IT IS NOT APPLICABLE FOR CLAUSE (F). HON 'BLE ANDHRA PRADESH HIGH COURT IN THE CASE OF SRIKAKOLLU SHUBBA RAO & CO. 173 ITR 708 HAS HELD THAT IN ORDER TO APPLY THE PRO VISIONS OF SEC. 43B NOT ONLY SHOULD BE THE LIABILITY TO PAY TH E TAX OR DUTY BE INCURRED IN THE ACCOUNTING YEAR BUT ALSO SHOULD BE STATUTORILY PAYABLE IN THE ACCOUNTING YEAR. IN OUR CONSIDERED OPINION, THE PROVISION FOR LEAVE SALARY IS NOT A ST ATUTORY LIABILITY BUT ONLY A CONTRACTUAL LIABILITY WHICH IS PAYABLE ONLY IF THE EMPLOYEES RESIGNS OR RETIRED FROM THE SERVICES. WE ALSO ITA NO.2277/DEL./2013 10 FIND THAT THE HON'BLE CALCUTTA HIGH COURT IN THE CA SE OF EXCIDE INDUSTRIES LTD. (SUPRA) HAS STRUCK DOWN SEC. 43B(F) BEING ARBITRARY, UNCONSCIONABLE AND DEHORS THE APEX COURT DECISION IN THE CASE OF BHARAT EARTH MOVERS 245 ITR 428. IT IS RELEVANT TO STATE THAT THE TRIBUNAL IN THE CASE OF CIT VS UN IVERSAL MEDICARE IN ITA NO. 6191/M/08, HAS FOLLOWED THE DEC ISION OF THE HON'BLE SUPREME COURT IN THE CASE OF BHARAT EAR TH MOVERS AND DIRECTED THE AO TO ALLOW THE AMOUNTS SO CLAIMED . RESPECTFULLY FOLLOWING THE AFORE DISCUSSED DECISION S, WE DIRECT THE AO TO ALLOW THE CLAIM OF PROVISIONS FOR LEAVE S ALARY. GROUND NO. 6 IS ACCORDINGLY ALLOWED. RESPECTFULLY FOLLOWING THE ABOVE, GROUNDS NO. 4, 2 AND 2 FOR THE AY. S. UNDER APPEAL ARE DECIDED IN FAVOUR OF TH E ASSESSEE- COMPANY. IN VIEW OF THE ABOVE, GROUND NO. 4 IS DECIDED IN FA VOUR OF THE ASSESSEE.' ITAT, AHMEDABAD IN THE CASE OF M/S. SIEMENS HEALTHC ARE DIAGNOSTICS LTD., CITED SUPRA, HAS DECIDED THE ISSUE AS UNDER : - '27. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE ORDERS OF LOWER AUTHORITIES AND MATERIAL AVAILABLE ON RECORD. IN THE INSTANT CASE, THE DEDUCTION CLAIMED IN RESPECT OF PROVISION MADE FOR SICK LEAVE OF RS.4,12,609/- WAS DISALLOWED BY THE ASSESSING OFFICER BY INVOKING THE PROVISIONS OF SEC TION 43B (F) OF THE ACT. 28. ON APPEAL, THE DISPUTE RESOLUTION PANEL HELD AS UNDER: 'THE ASSESSEE MADE PROVISION FOR SICK LEAVE TO THE TUNE OF RS.4,12,609/- BASED ON VALUATION REPORT. THE ASSESS EE FURTHER ARGUED THAT THE SAME IS IN ACCORDANCE WITH AND TO C OMPLY WITH ACCOUNTING STANDARD-15 'EMPLOYEE BENEFITS'. THE VAL UATION IS CLAIMED TO BE BASED ON SCIENTIFIC BASIS AND BY T HE ACTUARY, WHO IS EXPERT IN THE FIELD. THE TPO DISALLOWED THE SAME UNDER SECTION 43B. WE DIRECT THE TPO TO VERIFY WHETHER TH E AMOUNT WAS ACTUALLY PAID IN THE SUBSEQUENT YEARS. IF SO, T HEN THE ASSESSEE'S CLAIM MAY BE ALLOWED T IS EAR IF THE SAM E HAS NOT BEEN ALLOWED IN THE YEAR OF PAYMENT. HOWEVER, IF IT IS FOUND ITA NO.2277/DEL./2013 11 THAT NO SUCH PAYMENTS WERE ACTUALLY MADE EVEN IN TH E NEXT TWO OR THREE YEARS, THEN NO DEDUCTION NEEDS TO BE ALLOW ED FOR THE PROVISION MADE FOR THE FUTURE CONTINGENT LIABILITIE S.' 29. WE FIND THAT THIS TRIBUNAL IN THE CASE OF EIMCO ELECON (INDIA) LTD. V. ACIT (2013) 22 ITR (TRIB.) 380 (AHD ) HELD AS UNDER: '3.1 IT WAS SUBMITTED BY THE LD. AUTHORIZED REPRESE NTATIVE OF THE ASSESSEE THAT THE DISALLOWANCE WAS MADE BY T HE A.O. BY INVOKING THE PROVISIONS OF CLAUSE (F) OF SECTION 43 B. HE SUBMITTED THAT AS PER THE DECISION OF HON'BLE APEX COURT RENDERED IN THE CASE OF BHARAT EARTH MOVERS AS REPO RTED IN 241 ITR 428 AND ALSO AS PER THE JUDGMENT OF HON'BLE CAL CUTTA HIGH COURT RENDERED IN THE CASE OF EXIDE INDUSTRIES LTD. AND ANOTHER VS. UOI AND OTHERS AS REPORTED IN 292 ITR 4 70 (CAL.), DISALLOWANCE OF LEAVE ENCASHMENT IS NOT JUS TIFIED. HE SUBMITTED THAT IN THE FIRST CASE, IT WAS HELD BY TH E HON'BLE APEX COURT THAT LEAVE ENCASHMENT IS NOT A CONTINGEN T LIABILITY IF THE PROVISION IS MADE ON SOME SCIENTIFIC BASIS. HE ALSO SUBMITTED THAT IN THE SECOND CASE, HON'BLE CALCUTTA HIGH COURT HAS DULY CONSIDERED THE PROVISIONS OF CLAUSE (F) OF SECTION 43B AND IT WAS HELD THAT THE AMENDMENT AS PER WHICH THI S CLAUSE (F) WAS INSERTED BY THE FINANCE ACT 2001 W.E.F. 01.04. 2002 IS HELD TO BE AS ARBITRARY BY HON'BLE CALCUTTA HIGH CO URT AND, THEREFORE, THE SAME WAS STRUCK DOWN BY HON'BLE CALC UTTA HIGH COURT BEING ARBITRARY, UNCONSCIONABLE AND DEHORS TH E HON'BLE SUPREME COURT'S DECISION. HE SUBMITTED THAT IN VIEW OF THIS JUDGMENT OF HON'BLE CALCUTTA HIGH COURT, DISALLOWAN CE MADE BY THE A.O. IS NOT JUSTIFIED. LD. D. R. SUPPORTED THE ORDERS OF AUTHORITIES BELOW. 3.2 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUS ED THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW AND THE JUDGMENT OF HON'BLE CALCU TTA HIGH COURT RENDERED IN THE CASE OF EXIDE INDUSTRIES LTD. (SUPRA). WE FIND THAT THE A. O. HAS MADE DISALLOWANCE BY INVOKI NG THE PROVISIONS OF CLAUSE (T) OF SECTION 438 AND THE SAM E WAS CONFIRMED BY LD. CIT (A) ALSO ON THE BASIS OF SECTI ON 438. AS PER THE JUDGMENT OF HON'BLE CALCUTTA HIGH COURT REN DERED IN THE CASE OF EXIDE INDUSTRIES LTD. (SUPRA), IT WAS H ELD THAT CLAUSE (T) OF SECTION 438 IS ARBITRARY, UNCONSCIONA BLE AND DEHORS OF THE HON'BLE SUPREME COURT DECISION, AND T HEREFORE, ITA NO.2277/DEL./2013 12 NOT VALID. IN VIEW OF THIS, CLAUSE (T) OF SECTION 4 38 IS NOT VALID AND, THEREFORE, DISALLOWANCE MADE BY THE A. O. ON T HE BASIS OF CLAUSE (T) OF SECTION 438 CANNOT BE SUSTAINED. WE T HEREFORE DELETE THE SAME.' 30. THE DEPARTMENTAL REPRESENTATIVE COULD NOT POINT OUT ANY GOOD REASON AS TO WHY THE AFORESAID DECISION OF THE TRIBUNAL SHOULD NOT BE FOLLOWED IN THE INSTANT CASE . WE, THEREFORE, FOLLOWING THE ABOVE QUOTED DECISION OF T HE TRIBUNAL DELETE THE DISALLOWANCE OF 0 4, 12,906/- FOR THE RE ASONS MENTIONED IN THE ABOVE QUOTED DECISION. THUS, THIS GROUND OF THE APPEAL OF THE ASSESSEE IS ALLOWED.' SINCE THE FACTS AND THE ISSUE REMAINS THE SAME, RES PECTFULLY FOLLOWING THE AFORESAID DECISIONS OF COORDINATE BENCHES OF ITAT, WE ALLOW THIS GROUND OF ASSESSEES APPEAL. 15. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON THIS DAY OF 21 ST JANUARY, 2015. SD/- SD/- (I.C. SUDHIR) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED THE 21 ST DAY OF JANUARY, 2015 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A) -VIII, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.