Integrated Coal Mining Limited, Kolkata V. DCIT, Circle-6(1), Kolkata, Kolkata

ITA 584/KOL/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6529 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 1 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-04-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 24-03-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ARINDAM BHATTACHARJEE
• Assessee Lawyers: BIKASH CHANDA; ALOK GOENK A ACAS
• Section: 43B

Judgement Text

1 ITA NO.584& 585/KOL/2017 INTEGRATED COAL MINING LTD., AY- 2011-12 & 2012-13 , D , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH: KOL KATA ( ) . . , . ' # $% % , '( ) [BEFORE SHRI A. T. VARKEY, JM & DR. A. L. SAINI, A M] I.T.A. NOS. 584 & 585/KOL/2017 ASSESSMENT YEARS: 2011-12 & 2012-13 INTEGRATED COAL MINING LTD. (PAN: AAACI5584L) VS. DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-6(1), KOLKATA. APPELLANT RESPONDENT DATE OF HEARING 18.04.2018 DATE OF PRONOUNCEMENT 26.04.2018 FOR THE APPELLANT S/SHRI BIKASH CHANDA & ALOK GOENK A, ACAS FOR THE RESPONDENT SHRI ARINDAM BHATTACHARJEE, ADDL . CIT, SR. DR ORDER PER SHRI A.T.VARKEY, JM BOTH THESE APPEALS FILED BY THE ASSESSEE ARE AGAINS T THE ORDER OF LD. CIT(A)-6, KOLKATA DATED 24.01.2017 AND 24.02.2017 FOR AY 2011 -12 AND 2012-13 RESPECTIVELY. SINCE ISSUES ARE COMMON AND FACTS ARE IDENTICAL, WE DISPO SE OF BOTH THESE APPEALS BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE TAKI NG THE LEAD CASE FOR AY 2011-12. 2. THE SOLE GROUND TO BE DECIDED IN BOTH THE APPEA LS IS AS TO WHETHER PROVISION FOR LEAVE ENCASHMENT WHICH HAS BEEN DEBITED IN THE P&L ACCOUNT BASED ON ACTURIAL VALUATION TO THE TUNE OF RS.7,81,769/- AND RS. 4,71,454/- FOR AY 2011-12 AND 2012-13 RESPECTIVELY WOULD COME UNDER THE AMBIT OF PROVISIONS OF SEC. 43 B OF THE ACT. 3. THE BRIEF FACTS OF THIS ISSUE IS THAT ASSESSE E DEBITED A SUM OF RS. 7,81,769/- IN ITS PROFIT AND LOSS ACCOUNT TOWARDS PROVISION FOR LEAVE ENCASHMENT BASED ON ACTUARIAL VALUATION. THE AO INVOKED THE PROVISIONS OF SECTION 43B OF THE ACT AND SOUGHT TO DISALLOW THE SAID PROVISION AS ACCORDING TO HIM, THE SAME WO ULD BE ALLOWED AS DEDUCTION ONLY IN THE YEAR IN WHICH THE SAME IS PAID. ON FIRST APPEAL, TH E LEARNED CITA CONFIRMED THE ACTION OF THE AO. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 2 ITA NO.584& 585/KOL/2017 INTEGRATED COAL MINING LTD., AY- 2011-12 & 2012-13 4. THE LEARNED AR RELIED ON THE DECISION OF THE JU RISDICTIONAL HIGH COURT IN THE CASE OF EXIDE INDUSTRIES LTD. VS UNION OF INDIA REPORTED IN 292 ITR 470 (CAL) WHEREIN THE PROVISIONS OF SECTION 43B (F) OF THE ACT HAS BEEN S TRUCK DOWN AS ARBITRARY. HOWEVER HE FAIRLY CONCEDED THAT THE HON'BLE APEX COURT THOUGH HAD STAYED THE OPERATION OF THE JUDGEMENT OF CALCUTTA HIGH COURT INITIALLY BUT LATE R, IT HAD DIRECTED THE ASSESSES TO COMPLY WITH THE PROVISIONS OF SECTION 43B(F) OF THE ACT AN D PAY TAXES THEREON BUT PARALLELY CLAIM DEDUCTION FOR LEAVE ENCASHMENT ON PROVISION BASIS, AS AN INTERIM MEASURE TILL THE DISPOSAL OF THE CIVIL APPEAL BY THE APEX COURT. IN RESPONSE TO THIS, THE LEARNED DR VEHEMENTLY SUPPORTED THE ORDER OF THE LOWER AUTHORITIES. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND GONE TH ROUGH THE FACT AND CIRCUMSTANCES OF THE CASE. WE FIND THAT IT IS RELEVANT TO GET INTO THE OPERATIVE PORTION OF THE DECISION OF THE CALCUTTA HIGH COURT IN THE CASE OF EXIDE INDUSTRIES LTD VS UNION OF INDIA REPORTED IN 492 ITR 470. IT WAS HELD AS BELOW:- 11. IN THIS REGARD THE OBSERVATION OF THE APEX COU RT IN THE CASE OF BHARAT EARTH MOVERS (SUPRA) IS QUOTED BELOW: THE LAW IS SETTLED: IF A BUSINESS LIABILITY HAS DEF INITELY ARISEN IN THE ACCOUNTING YEAR, THE DEDUCTION SHOULD BE ALLOWED ALTHOUGH THE LIABIL ITY 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 REAS ONABLE CERTAINTY THOUGH THE ACTUAL QUANTIFICATION MAY NOT BE POSSIBLE. IF THESE REQUIR EMENTS 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 ABOVESAID SETTLED PRINCIPLES TO THE FA CTS 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 PR OPORTIONATE WITH THE ENTITLEMENT EARNED BY EMPLOYEES OF THE COMPANY, INCLUSIVE OF TH E OFFICERS AND THE STAFF, SUBJECT TO THE CEILING ON ACCUMULATION AS APPLICABLE ON THE RE LEVANT DATE, IS ENTITLED TO DEDUCTION OUT OF THE GROSS RECEIPTS FOR THE ACCOUNTING YEAR D URING WHICH THE PROVISION IS MADE FOR THE LIABILITY. THE LIABILITY IS NOT A CONTINGEN T 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 COUR T DECISION IN THE CASE OF BHARAT EARTH MOVERS (SUPRA)'. 3 ITA NO.584& 585/KOL/2017 INTEGRATED COAL MINING LTD., AY- 2011-12 & 2012-13 IT IS OBSERVED THAT THE REVENUE HAD PREFERRED SPECI AL LEAVE PETITION (SLP) BEFORE THE HON'BLE SUPREME COURT AGAINST THE JUDGEMENT OF HON' BLE CALCUTTA HIGH COURT. THE HON'BLE APEX COURT IN SLP PROCEEDINGS IN CC 12060/2008 DATE D 8.9.2008 HAD HELD AS UNDER.- 'THE PETITION WAS CALLED ON FOR HEARING TODAY. UPON HEARING COUNSEL THE COURT MADE THE FOLLOWING O RDER. ISSUE NOTICE. IN THE MEANTIME, THERE SHALL BE STAY OF THE IMPUGNE D JUDGEMENT, UNTIL FURTHER ORDERS.' LATER THE HON'BLE SUPREME COURT IN CC 22889 / 2008 DATED 8.5.2009 HAD HELD AS UNDER:- 'THE PETITION WAS CALLED ON FOR HEARING TODAY. UPON HEARING COUNSEL THE COURT MADE THE FOLLOWING O RDER DELAY CONDONED. LEAVE GRANTED. PENDING HEARING AND FINAL DISPOSAL OF THE CIVIL APP EAL, DEPARTMENT IS RESTRAINED FROM RECOVERING PENALTY AND INTEREST WHICH HAS ACCRUED T ILL DATE. IT IS MADE CLEAR THAT AS FAR AS THE OUTSTANDING INTEREST DEMAND AS OF DATE IS CONCE RNED, IT WOULD BE OPEN TO THE DEPARTMENT TO RECOVER THAT AMOUNT IN CASE CIVIL APP EAL OF THE DEPARTMENT IS ALLOWED. WE FURTHER MAKE IT CLEAR THAT THE ASSESSEE WOULD, D URING THE PENDENCY OF THIS CIVIL APPEAL, PAY TAX AS IF SECTION 43B(F) IS ON THE STATUTE BOOK BUT AT THE SAME TIME IT WOULD BE ENTITLED TO MAKE A CLAIM IN ITS RETURNS.' IN THE AFORESAID CIRCUMSTANCES, WE DEEM IT FIT AND APPROPRIATE, IN THE INTEREST OF JUSTICE AND FAIR PLAY, TO SET ASIDE THIS ISSUE TO T HE FILE OF THE AO TO PASS ORDERS BASED ON THE OUTCOME OF THE MAIN APPEAL ON MERITS BY THE HON'BLE SUPREME COURT AS STATED SUPRA. ACCORDINGLY, THE GROUND OF APPEALS OF ASSESSEE FOR BOTH THE YEARS ARE ALLOWED FOR STATISTICAL PURPOSES. 6. IN THE RESULT, BOTH THE APPEALS OF ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER IS PRONOUNCED IN THE OPEN COURT ON 26.04.2018 SD/- SD/- (DR. A. L. SAINI) (ABY. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 26TH APRIL, 2018 JD.(SR.P.S.) 4 ITA NO.584& 585/KOL/2017 INTEGRATED COAL MINING LTD., AY- 2011-12 & 2012-13 COPY OF THE ORDER FORWARDED TO: 1. APPELLANT INTEGRATED COAL MINING LTD., 6, CHUR CH LANE, KOLKATA-700 001. . 2 RESPONDENT DCIT, CIRCLE-6(1), KOLKATA. 3. THE CIT(A) KOLKATA. 4. 5. CIT KOLKATA DR, ITAT, KOLKATA. / TRUE COPY, BY ORDER, SR. PVT. SECRETARY