TATA SERVICES LTD, MUMBAI V. ACIT 2(3), MUMBAI

ITA 6459/MUM/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 55220 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-09-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 06-09-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 16-12-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: GOLI SRINIWAS RAO
• Assessee Lawyers: BURZIS S TARAPOREVALA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, H, MUMBAI BEFORE SHRI R V EASWAR, PRESIDENT AND SHRI P M JAGTAP, ACCOUNTANT MEMBER I T A NO: 6459/MUM/2009 (ASSESSMENT YEAR: 2005-06) TATA SERVICES LTD., MUMBAI APPELLANT (PAN: AAACT3991J) VS ASSISTANT COMMISSIONER OF INCOME TAX 2(3) RESPO NDENT MUMBAI ASSESSEE BY: MR BURZIS S TARAPOREVALA REVENUE BY: MR GOLI SRINIWAS RAO DATE OF HEARING: 6 TH SEPTEMBER 2011 DATE OF PRONOUNCEMENT: 9 TH SEPTEMBER 2011 O R D E R R V EASWAR, PRESIDENT: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E DISALLOWANCE OF ` 30,11,135/- MADE UNDER SECTION 43B(F) OF THE INCOME TAX ACT, 1961. 2. THE ASSESSEE IS A COMPANY AND WE ARE CONCERNED W ITH THE ASSESSMENT YEAR 2005-06. IN THE RETURN FILED BY T HE ASSESSEE, IT MADE A DISALLOWANCE OF ` 30,11,135/- BEING PROVISION FOR LEAVE ENCASHMENT. HOWEVER, IN THE COURSE OF THE ASSESSME NT PROCEEDINGS IT CONTENDED THAT IN VIEW OF THE JUDGME NT OF THE CALCUTTA HIGH COURT IN THE CASE OF EXIDE INDUSTRIES & ANOTHER VS. UNION OF INDIA (2007) 292 ITR 470 (CAL), THE PROVIS ION SHOULD BE ALLOWED AS A DEDUCTION. IT MAY BE MENTIONED HEREIN THAT IN THE 2 ITA NO: 6459/MUM/2009 AFORESAID DECISION, SECTION 43B(F) WAS STRUCK DOWN AS BEING ARBITRARY, UNCONSCIONABLE AND DE HORS THE SUPREME C OURT JUDGMENT IN THE CASE OF BHARAT EARTH MOVERS VS. CIT (2000) 2 45 ITR 428 (SC). THE AO HOWEVER DID NOT ACCEPT THE ASSESSEES CLAIM THAT THE PROVISION SHOULD BE ALLOWED AS A DEDUCTION AND ACCO RDINGLY, WHILE COMPUTING THE TOTAL INCOME, DISALLOWED AND ADDED BA CK THE SAME. 3. THE ASSESSEES APPEAL AGAINST THE DISALLOWANCE O F THE PROVISION WAS DISMISSED BY THE CIT(A) FOLLOWING HIS PREDECESSORS ORDERS FOR THE ASSESSMENT YEARS 2003-04 AND 2004-05 . HENCE, THE PRESENT APPEAL. 4. AT THE TIME OF THE HEARING BEFORE US, THE LEARNE D REPRESENTATIVE FOR THE ASSESSEE FAIRLY DREW OUR ATT ENTION TO THE ORDER OF THE SUPREME COURT MADE ON 8 TH SEPTEMBER 2008, BY WHICH THE JUDGMENT OF THE CALCUTTA HIGH COURT (SUPRA) WAS STAYED UNTIL FURTHER ORDERS. OUR ATTENTION WAS ALSO DRAWN TO TH E ORDER OF THE SUPREME COURT PASSED ON 8 TH MAY 2009, IN WHICH IT WAS MADE CLEAR THAT THE ASSESSEE WOULD, DURING THE PENDENCY OF THE CIVIL APPEAL, PAY TAX AS IF SECTION 43B(F) WAS ON THE STATUTE BOO K, BUT AT THE SAME TIME IT WOULD BE ENTITLED TO MAKE A CLAIM (FOR DEDUCTION) IN THE RETURNS. THERE WAS NO MODIFICATION OF THE STAY OF OPERATION OF THE JUDGMENT OF THE CALCUTTA HIGH COURT. IN VIEW THERE OF, IT SEEMS TO US THAT THE ASSESSMENT HAS TO BE MADE AS IF SECTION 43 B(F) REMAINED IN THE STATUTE BOOK AS A VALID PROVISION. IT IS NO T DISPUTED THAT IF THE SECTION IS CONSTITUTIONALLY VALID, THE DISALLOWANCE OF THE PROVISION WOULD BE CORRECT. SINCE THE JUDGMENT OF THE CALCUT TA HIGH COURT 3 ITA NO: 6459/MUM/2009 (SUPRA) HAS BEEN STAYED, WE HAVE TO HOLD THAT THE D ISALLOWANCE HAS BEEN RIGHTLY MADE BY THE DEPARTMENTAL AUTHORITIES. WE ACCORDINGLY CONFIRM THE DISALLOWANCE. THE APPEAL IS DISMISSED WITH NO ORDER AS TO COSTS. ORDER PRONOUNCED IN THE OPEN COURT ON 9 TH SEPTEMBER 2011. SD/- SD/- (P M JAGTAP) (R V EASWAR) ACCOUNTANT MEMBER PRESIDENT MUMBAI, DATED 9 TH SEPTEMBER 2011 SALDANHA COPY TO: 1. TATA SERVICES LTD. BOMBAY HOUSE, 24, HOMI MODY STREET, FORT, MUMBAI 400 001 2. ACIT 2(3), MUMBAI 3. CIT-2, MUMBAI 4. CIT(A)-6, MUMBAI 5. DR H BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI