Allahabad Bank, Kolkata V. The PCIT, KOLKATA-2, KOLKATA, Kolkata

ITA 730/KOL/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4351 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-10-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 26-07-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 26-05-2015
• Court: TRIBUNAL
• Department Lawyers: ABHIJIT DATTA JCIT LD
• Assessee Lawyers: PIJUSH DEY FCA LD
• Section: 143(3); 263; 63

Judgement Text

ITA NO. 730/KOL/15 ALLAHABAD BANK 1 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, KOLKATA BEFORE: SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI S.S.VISWANETHRA RAVI, JUDICIAL MEMBER I.T.A. NO. 730/KOL/2015 A.Y: 2010-11 ALLAHABAD BANK VS. PRINCIPAL COMMISSIONER PAN: AABCC 2903N OF INCOME-TAX, K OLKATA-2 (APPELLANT) (RESPONDENT) APPEARANCES BY: SHRI PIJUSH DEY, FCA, LD. AR FOR THE ASSESSEE SHRI ABHIJIT DATTA, JCIT, LD. SR. DR DATE OF HEARING : 26-07-2016 DATE OF PRONOUNCEMENT : 19-10-2016 O R D E R SHRI S.S. VISWANETHRA RAVI, JM : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 25-03-2015 PASSED BY THE PRL. COMMISSIONER OF INCOME TAX, KOLKATA-2 U/S.263 OF THE ACT FOR THE ASSESSMEN T YEAR 2010-11. 2. IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOLL OWING EFFECTIVE GROUND:- 1. THAT, ON FACTS AS WELL AS ON LAW, THE LEARNED PR INCIPAL COMMISSIONER OF INCOME TAX, KOL - 2 HAS ERRED IN CO NSIDERING THE ASSESSMENT ORDER PASSED BY THE LEARNED DEPUTY C IT, CIRCLE - 6, KOL AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE ON THE GROUND THAT PROVISION OF RS.153 CROR ES TOWARDS ESTIMATED LIABILITY ON WAGE ARREARS MADE DU RING THE PREVIOUS YEAR 2009-10 HAD BEEN ALLOWED AS DEDUCTION . ITA NO. 730/KOL/15 ALLAHABAD BANK 2 2. THAT, ON FACTS AS WELL AS ON LAW, THE LEARNED PR INCIPAL COMMISSIONER OF INCOME TAX, KOL - 2 HAS ERRED IN PA SSING THE IMPUGNED ORDER UNDER SECTION 263 AND SETTING ASIDE THE ASSESSMENT ORDER PASSED BY THE LEARNED ASSESSING OF FICER UNDER SECTION 143(3) IGNORING THE SUBMISSIONS MADE BY THE APPELLANT IN RESPONSE TO THE NOTICE UNDER SECTION 2 63. 3. THAT, ON FACTS AS WELL AS ON LAW, THE LEARNED P RINCIPAL COMMISSIONER OF INCOME TAX, KOL - 2 HAS ERRED IN HO LDING THAT THE PROVISION OF RS. 153 CRORES MADE DURING THE FIN ANCIAL YEAR 2009-10 TOWARDS ESTIMATED LIABILITY ON WAGE ARREARS PENDING FINALIZATION OF WAGE REVISION IS NOT ALLOWABLE AS D EDUCTION IN TOTAL DISREGARD OF THE METHOD OF ACCOUNTING REGULAR LY FOLLOWED BY THE APPELLANT, THE MANDATORY ACCOUNTING STANDARD APPLICABLE TO THE APPELLANT AND JUDICIAL PRONOUNCEM ENTS ON THE IDENTICAL ISSUE. 4.THAT, ON FACTS AS WELL AS ON LAW, THE LEARNED PRI NCIPAL COMMISSIONER OF INCOME TAX, KOL - 2 HAS FAILED TO A PPRECIATE THAT PROVISION FOR WAGE REVISION IN CASE OF THE APP ELLANT IS AN ASCERTAINED LIABILITY, WHICH HAD ACCRUED DURING THE PREVIOUS YEAR 2009-10. 5. THAT, ON FACTS AS WELL AS ON LAW, THE LEARNED PR INCIPAL COMMISSIONER OF INCOME TAX, KOL - 2 HAS ERRED IN ST ATING IN HIS ORDER UNDER SECTION 263 THAT THE APPELLANT CLAI MED DEDUCTION OF RS. 122 CRORES AS PROVISION WRITTEN BA CK WITHOUT EXAMINING THE AUDITED FINANCIAL STATEMENTS FOR THE YEAR UNDER APPEAL. 6. THAT, ON FACTS AS WELL AS ON LAW, THE LEARNED PR INCIPAL COMMISSIONER OF INCOME TAX, KOL - 2 HAS ERRED IN IN ITIATING THE PROCEEDING UNDER SECTION 263 IGNORING THE PARTI CULARS AND INFORMATION AVAILABLE ON RECORD WITH THE ASSESSING OFFICER AT THE TIME OF MAKING ASSESSMENT. 7. THAT YOUR APPELLANT BEGS YOUR LEAVE TO URGE ANY ADDITIONAL GROUND OR MODIFY ANY GROUNDS AT THE TIME OF HEARING . 3. SUBSEQUENTLY, THE ASSESSEE HAS ALSO RAISED FOLLO WING ADDITIONAL GROUND OF APPEAL:- 'THAT IN THE FACTS AND CIRCUMSTANCES OF THE APPELLA NT AND ALSO ON LAW THE LEARNED PRINCIPAL COMMISSIONER OF INCOME TAX, KOL - 2 HAS ERRED IN FIRST CONCLUDING T HAT PROVISION FOR LIABILITY OF WAGE ARREARS AMOUNTING T O RS. 153 CRORES IS NOT ALLOWABLE AND IS REQUIRED TO BE ADDED BACK AND THEREAFTER DIRECTING THE LEARNED ASSESSING OFFICER TO EXAMINE THE ISSUE THEREBY MAKING IT IMPOSSIBLE FOR THE LEARNED ASSESSING OFFICER TO APPLY HIS MIND INDEPEN DENTLY AND JUDICIOUSLY'. ITA NO. 730/KOL/15 ALLAHABAD BANK 3 4. THE SOLE ISSUE TO BE DECIDED IN GROUNDS NO. 1 TO 7 AND ADDITIONAL GROUND RAISED THEREOF, WHICH INVOLVE A C OMMON ISSUE IS AS TO WHETHER THE PRL.CIT IS JUSTIFIED IN HOLDIN G THE PROVISION OF RS. 153 CRORES TOWARDS ESTIMATED LIABILITY ON WA GE ARREARS PENDING FINALIZATION OF WAGE REVISION MADE DURING T HE FINANCIAL YEAR 2009-10 NOT ALLOWABLE AS DEDUCTION. 5. THE PRL.CIT ON AN EXAMINATION OF ASSESSMENT RECO RDS FOUND THAT THE ASSESSEE HAS MADE A PROVISION OF RS.122,00,00,000/- DURING F.Y 2008-09 ADDED THE SAM E TO THE TOTAL INCOME OF ASSESEE FOR A.Y 2009-10 AND DEDUCTE D THE SAME AS WRITTEN BACK FOR A.Y 2010-11. ACCORDING TO PRL.C IT, THE PROVISION MADE AND WRITTEN BACK THEREON IS NOT ALLO WABLE AS A DEDUCTION, ACCORDINGLY, EXERCISING JURISDICTION U/S EC 263 OF THE ACT ISSUED NOTICE TO THE ASSESSEE. IN RESPONSE TO W HICH, THE ASSESSEE FILED COPY OF EXTRACT OF 9 TH BIPARTITE SETTLEMENT DT:27- 04-2010 AND COPIES OF VOUCHERS ISSUED BY THE BANK S HOWING PAYMENT OF WAGES. CONSIDERING THE SAID DOCUMENTS, T HE PRL. CIT WAS OF THE OPINION THAT THE AO DID NOT MAKE ANY ENQUIRES AND DID NOT EXAMINE THE ALLOWABILITY OF DEDUCTION A S SHOWN IN THE COMPUTATION OF INCOME. THEREBY, THE PRL.CIT SET ASIDE THE ASSESSMENT ORDER DT:28-03-2013 FOR A.Y 2010-11 TO T HE EXTENT THE CLAIM AS DISCUSSED ABOVE AND DIRECTED THE AO TO EXAMINE THE ISSUE WITH REFERENCE TO THE DOCUMENTS SUBMITTED IN PROCEEDINGS INITIATED U/S.263 OF THE ACT. 6. AGGRIEVED BY THE ORDER OF PRL.CIT, IN THIS APPEA L THE LEARNED AR SUBMITS THAT PENDING FINALISATION OF WAG E REVISION A PROVISION WAS MADE DURING FINANCIAL YEAR 2009-10 AN D REFERRED TO THE POINT 17.4 TO SUBSTANTIATE THE SAME PLACED A T PAGE ITA NO. 730/KOL/15 ALLAHABAD BANK 4 NUMBER 139 OF ANNUAL REPORT BOOK AND ALSO REFERRED TO THE PAGE NUMBER 40 PAPER BOOK AND SUBMITTED A MEMO WAS ISSUED BY THE CHIEF MANAGER TO ALL AGMS TO CREATE A PROVIS ION TOWARDS WAGE/SALARY REVISION IN VIEW OF THE BIPARTITE SETTL EMENT. THE LEARNED AR ALSO DREW OUR ATTENTION TO THE PAGE NUMB ER 25 OF THE PAPER BOOK TO SHOW THE BREAKUP OF PROVISION MAD E IN VIEW OF THE WAGE AREAS SETTLEMENT. THE LEARNED AR FURTHE R SUBMITS THAT THE SAID ISSUE WAS COVERED BY THE ORDER OF TRI BUNAL IN ASSESSEES OWN CASE FOR AYS 2005 06 AND 06 07 WHICH IS PLACED AT PAGE NUMBER 100 OF PAPER BOOK. 7. THE LEARNED DR SUBMITS THAT THE PRL.CIT HAS GIVE N A DIRECTION ONLY TO THE AO FOR EXAMINATION OF SUCH DO CUMENTS WHICH WERE PRODUCED IN PROCEEDINGS INITIATED U/S. 2 63 OF THE ACT. FURTHER HE SUBMITS THAT THE RESPONDENT REVENUE CONTESTING THE ORDER OF TRIBUNAL AS RELIED ON BY THE LEARNED A R AS IT WAS DELIVERED BASED ON SOME FACTS. THE LEARNED DR FURTH ER ARGUED THAT THE ASSESSEE CLAIMED A PROVISION INVOLVING OF THESE 122 CRORES IN ITS COMPUTATION OF INCOME AND THE AO DID NOT EXAMINE THE ISSUE RELATING TO 908 CRORES AND THE SAME WAS N OT REFERRED AT .17.4 OF ANNUAL REPORT. THE LEARNED DR SUBMITS T HAT THE NEW AGREEMENT WAS SAID TO HAVE ENTERED IN 2005 AND THER E IS A GAP OF 5 YEARS FROM 2005 06 AND 201011 AND THE ORDER OF PRL. CIT IS VALID WHEREIN THERE WAS ONLY A DIRECTION TO THE AO TO CONDUCT AN ENQUIRY AND IT IS A LIMITED ENQUIRY. 8. THE LD.AR SUBMITS THAT IN REPLY TO THE ARGUMENTS OF LD.DR, THE ASSESSEE BY INADVERTENT MISTAKE ADDED RS.122,00,00,000/- TO ITS INCOME IN A.Y.2009-10 AND TO THAT EFFECT THE ASSESSEE FILED AN ADDITIONAL GROUND SEEK ING DEDUCTION OF SUCH AMOUNT BEFORE THE TRIBUNAL. ITA NO. 730/KOL/15 ALLAHABAD BANK 5 9. HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL EVIDENCE ON RECORD. THE TRIBUNAL FOR A.Y 2005-06 & 06-07 IN ASSESSEES OWN CASE HELD THAT THE WAGE REVISION AT 13% FOR THE YEAR UNDER CONSIDERATION IS A LIABILITY AND A PROVISION CAN BE MADE WITH REASONABLE CERTAINTY. THE RELEVANT PORTION OF WHICH REPRODUCED HEREIN BELOW: 13. NOW WE TAKE UP THE REVENUES APPEAL FOR A.Y. 20 05-06 BEING ITA NO. 2070/KOL/2009, GROUNDS NO. 1 & 2 OF W HICH INVOLVE A COMMON ISSUE RELATING TO THE DELETION BY THE LD. CIT(APPEALS) OF THE ADDITION OF RS.138.83 CRORES .M ADE BY THE ASSESSING OFFICER ON ACCOUNT OF PROVISION FOR SALAR Y ARREARS. 14. IN THE RETURN OF INCOME FILED FOR THE YEAR UNDE R CONSIDERATION, A DEDUCTION OF RS.138.83 CRORES WAS CLAIMED BY THE ASSESSEE ON ACCOUNT OF PROVISION FOR SALARY ARR EARS. IN THIS CONNECTION, IT WAS SUBMITTED ON BEHALF OF THE ASSESSEE BEFORE THE ASSESSING OFFICER THAT THE LAST WAGE AGR EEMENT ENTERED INTO WITH THE EMPLOYEES HAD ALREADY EXPIRED ON 31.10.2002 AND THE REVISION OF SALARY AND WAGES OF OFFICERS AND WORKMEN WAS DUE FROM 01.11.2002. THE NEGOTIATIO N FOR REVISION BETWEEN THE BANK AND THE UNION OF STAFF AN D OFFICERS ASSOCIATION WAS IN PROGRESS DURING THE YEAR UNDER CONSIDERATION AND AS PER ADVICE OF INDIAN BANKS AS SOCIATION, AN UNDERSTANDING WAS REACHED WITH THE WORKMEN UNION AND OFFICERS ASSOCIATIONS ON WAGE REVISION. IT WAS SUB MITTED THAT EVEN THOUGH THE FINAL AGREEMENT WAS NOT EXECUTED DU RING THE YEAR UNDER CONSIDERATION, PROVISION OF RS.138.83 CR ORES WAS MADE IN THE ACCOUNTS BASED ESTIMATE OF SUCH LIABILI TY MADE BY THE MANAGEMENT AND DULY VERIFIED BY THE STATUTORY A UDITORS. THESE SUBMISSIONS MADE BY THE ASSESSEE IN SUPPORT O F ITS CLAIM FOR DEDUCTION ON ACCOUNT OF PROVISION FOR SAL ARY ARREARS WERE NOT FOUND ACCEPTABLE BY THE ASSESSING OFFICER. ACCORDING TO HIM, SINCE THE EXPENDITURE ON ACCOUNT OF SALARY ARREARS WAS NOT QUANTIFIED, THE PROVISION MADE FOR THE SAME WAS IN THE NATURE OF UNASCERTAINED LIABILITY AND THE ASSESSEE WAS NOT ENTITLED TO CLAIM DEDUCTION FOR THE SAME. ACCORDING LY, HE DISALLOWED THE DEDUCTION CLAIMED BY THE ASSESSEE ON ACCOUNT OF PROVISION FOR SALARY ARREARS. 15. THE DISALLOWANCE MADE BY THE ASSESSING OFFICER ON ACCOUNT OF ITS CLAIM FOR DEDUCTION TOWARDS PROVISIO N FOR SALARY ARREARS WAS CHALLENGED BY THE ASSESSEE IN THE APPEA L FILED BEFORE THE LD. CIT(APPEALS) AND AFTER CONSIDERING T HE SUBMISSION MADE BY THE ASSESSEE AS WELL AS THE MATE RIAL AVAILABLE ON RECORD, THE LD. CIT(APPEALS) DELETED T HE SAID DISALLOWANCE FOR THE FOLLOWING REASONS GIVEN IN HIS IMPUGNED ORDER:- ITA NO. 730/KOL/15 ALLAHABAD BANK 6 I HAVE GONE THROUGH THE SUBMISSIONS OF THE APPELLA NT AND ALSO THE ORDER OF THE A.O. ACCORDING TO THE ACCOUNT ING STANDARD 29 ISSUED BY THE ICAI 'PROVISION' IS A LIA BILITY WHICH CAN BE MEASURED ONLY BY USING A SUBSTANTIAL DEGREE OF ESTIMATION. A 'LIABILITY' IS A PRESENT OBLIGATION O F THE ENTERPRISE ARISING FROM PAST EVENTS, THE SETTLEMENT OF WHICH IS EXPECTED TO RESULT IN AN OUTFLOW FROM THE ENTERPRIS E OF RESOURCES EMBODYING ECONOMIC BENEFITS. ACCORDING TO PARAGRAPH 14 OF (AS) 29, A PROVISION SHOULD BE RECO GNIZED WHEN: A) AN ENTERPRISE HAS A PRESENT OBLIGATION AS A RESU LT OF PAST EVENT B) IT IS PROBABLE THAT AN OUTFLOW OF RESOURCES EMBO DYING ECONOMIC BENEFITS WILL BE REQUIRED TO SETTLE THE OB LIGATION; AND C) A RELIABLE ESTIMATE CAN BE MADE OUT OF THE OBLIGATION. IF THE ABOVE CONDITIONS ARE MADE, PROVISION SHOULD BE RECOGNIZED IN THE FINANCIAL STATEMENTS. IT IS AN AC CEPTED PRINCIPLE THAT THE SALARY/WAGE ACCRUED DAILY, WEEKL Y, MONTHLY AS PER THE CONTRACT OF APPOINTMENT. THE LIABILITY O F THE BANK TO PAY SALARY AND WAGES AT THE REVISED RATES COMMEN CED FROM THE DATE OF EXPIRY OF THE AGREEMENT. THE LIABILITY TO COMPENSATE THE EMPLOYEES FOR THE SERVICES RENDERED IS AN EXISTING LIABILITY. THERE IS AN EVERY PROBABILITY O F OUTFLOW OF RESOURCES ON ACCOUNT OF SALARY INCREASE. THE BASIS OF ESTIMATE MADE BY THE BANK IS ALSO RELIABLE AND WAS NOT DISPU TED BY THE A.O. RECENTLY THE HONBLE APEX COURT IN THE CASE OF ROTO RK CONTROLS INDIA (P) LIMITED VS.- CIT (2009) 180 TAX MAN 422 (SC) HAS HELD THAT A PROVISION TO QUALIFY FOR RECOG NITION AND DEDUCTION, THERE MUST BE A PRESENT OBLIGATION ARISI NG FROM PAST EVENT, SETTLEMENT OF WHICH IS EXPECTED TO RESU LT IN AN OUTFLOW OF RESOURCES AND IN RESPECT OF WHICH A RELI ABLE ESTIMATE OF AMOUNT OF OBLIGATION IS POSSIBLE. THIS DECISION WAS RENDERED BY THE HONORABLE SUPREME COURT IN CONNECTI ON WITH THE PROVISION MADE BY THE ASSESSEE FOR OBLIGATION U NDER WARRANTY CONTRACTION CAREFUL ANALYSIS OF THIS DECIS ION, IT CAN BE SEEN THAT THE COURT HAS TAKEN INTO COGNIZANCE AS 29 OF ICAI IN DECIDING WHETHER A PROVISION FOR EXPENDITUR E IS ALLOWABLE OR NOT. FOLLOWING THE ABOVE DECISION OF T HE SUPREME COURT, THE ITAT, NAGPUR BENCH IN THE CASE OF WESTER N COALFIELDS LIMITED V ACIT, 2009-TIOL-589-ITAT-NAGPU R HAS ALLOWED DEDUCTION IN RESPECT OF PROVISION FOR INCRE MENTAL WAGES MADE ON ESTIMATED BASIS ON ACCOUNT OF PENDING NATIONAL COAL WAGE AGREEMENT -IV FOR A.Y. 2002-2003 . IN MY OPINION PROVISION FOR WAGE ARREARS MADE BY THE BANK IN THE FINANCIAL YEAR 2004-2005 SATISFIES ALL THE CONDITIO NS PRESCRIBED IN AS 29. HENCE THE A.O IS DIRECTED TO A LLOW THE PROVISION FOR WAGE ARREARS AND THIS GROUND OF APPEA L IS ALLOWED. ITA NO. 730/KOL/15 ALLAHABAD BANK 7 16. THE LD. D.R. SUBMITTED THAT THERE WAS NO BASIS GIVEN BY THE ASSESESE ON WHICH THE AMOUNT OF SALARY ARREARS PAYABLE TO THE STAFF AND OFFICERS COULD REASONABLY BE QUANTIF IED AND IN THE ABSENCE OF THE SAME AS WELL AS ANY SPECIFIC EVE NT THAT OCCURRED DURING THE YEAR UNDER CONSIDERATION SHOWIN G THAT THE LIABILITY ON ACCOUNT OF SALARY ARREARS HAD CRYSTALL IZED, THE PROVISION MADE BY THE ASSESESE FOR SALARY ARREARS R EPRESENTED UNASCERTAINED LIABILITY WHICH WAS NOT ALLOWABLE AS DEDUCTION, AS RIGHTLY HELD BY THE ASSESSING OFFICER. HE CONTEN DED THAT THE LD. CIT(APPEALS), HOWEVER, OVERLOOKED THESE REL EVANT ASPECTS HIGHLIGHTED BY THE ASSESSING OFFICER AND AL LOWED THE CLAIM OF THE ASSESSEE BY RELYING ON THE DECISIONS O F THE HONBLE SUPREME COURT IN THE CASE OF BHARAT EARTH M OVERS (SUPRA) AND ROTORK CONTROLS INDIA (P) LIMITED (SUPR A), WHICH ARE DISTINGUISHABLE ON FACTS. HE CONTENDED THAT IN BOTH THESE CASES DECIDED BY THE HONBLE SUPREME COURT, THE PRO VISION WAS MADE FOR THE PRESENT LIABILITY, WHEREAS IN THE CASE OF THE ASSESSEE, THE LIABILITY ON ACCOUNT OF SALARY ARREAR S WAS NOT PERTAINING TO THE YEAR UNDER CONSIDERATION ALONE, B UT THE SAME PERTAINED TO A.Y. 2003-04 AND 2004-05 ALSO. HE HAS SUBMITTED THAT THE DECISION OF HYDERABAD BENCH OF I TAT IN THE CASE OF ANDHRA PRADESH GRAMIN VIKAS BANK (ITA NOS. 51 & 88/HYD/2015 DATED 10.04.2015), ON THE OTHER HAND, I S DIRECTLY APPLICABLE TO THE FACTS OF THE PRESENT CAS E AND STRONGLY RELIED ON THE SAME IN SUPPORT OF THE REVEN UES CASE ON THIS ISSUE. 17. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, SUBMITTED THAT THE SALARY AND WAGE REVISION WAS DUE FROM 01.11.2002 AND IT, THEREFORE, CANNOT BE DISPUTED TH AT THE LIABILITY ON ACCOUNT OF SUCH WAGE REVISION HAD ALRE ADY ACCRUED. HE SUBMITTED THAT THE BI-PARTITE TALKS BET WEEN INDIAN BANKS ASSOCIATIONS AND EMPLOYEES UNION WERE ALMOST AT THE FINAL STAGE AS ON 31.03.2005 AND ON THE BASI S OF NEGOTIATIONS THAT HAD TAKEN PLACE AND AN UNDERSTAND ING THAT HAD REACHED, THE LIABILITY WAS ESTIMATED BY THE ASS ESSEE AT 13% ON ACCOUNT OF WAGE ARREARS. HE CONTENDED THAT T HE FACT THAT AS PER THE AGREEMENT FINALLY ENTERED INTO IN M AY, 2005, A WAGE REVISION OF 13.25% WAS AGREED IS SUFFICIENT TO SHOW THAT THE PROVISION MADE BY THE ASSESSEE AT 13% REPRESENT ED A LIABILITY, WHICH COULD BE REASONABLY ESTIMATED. HE SUBMITTED THAT A SIMILAR ISSUE INVOLVED IN THE CASE OF ABP CO MPANY LIMITED VS.- ACIT HAS BEEN DECIDED BY THE COORDINA TE BENCH OF THIS TRIBUNAL IN FAVOUR OF THE ASSESESE IN SIMIL AR FACTS AND CIRCUMSTANCES VIDE ITS ORDER REPORTED IN 78 TTJ (CA L) 158. 18. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND AL SO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS OBSERVED THAT THE SALARY AND WAGE REVISION AGREEMEN T ENTERED INTO BY THE ASSESSEE-BANK WITH ITS STAFF AN D OFFICERS EARLIER HAD ALREADY EXPIRED ON 31.10.2002 AND, THER EFORE, THE NEW REVISION WAS DUE RIGHT FROM 01.11.2002. THE LIA BILITY ON ACCOUNT OF SALARY ARREARS THUS HAD ALREADY ACCRUED AND THE ISSUE THAT IS REQUIRED TO BE CONSIDERED IS WHETHER IT WAS ITA NO. 730/KOL/15 ALLAHABAD BANK 8 POSSIBLE TO ASCERTAIN OR QUANTIFY THE SAME WITH REA SONABLE CERTAINTY IN THE YEAR UNDER CONSIDERATION. IN THIS REGARD, IT IS OBSERVED THAT THE NEGOTIATIONS BETWEEN INDIAN BANKS ASSOCIATION AND EMPLOYEES UNION HAD ALREADY TAKEN PLACE AND THE FINAL UNDERSTANDING WAS ALMOST REACHED DURING T HE YEAR UNDER CONSIDERATION, WHICH IS EVIDENT FROM THE FACT THAT THE FINAL AGREEMENT FOR REVISION WAS ENTERED INTO IN TH E MONTH OF MAY, 2005 ITSELF, I.E. IMMEDIATELY AFTER THE END OF THE YEAR UNDER CONSIDERATION. THE FACT THAT THE REVISION WAS FINALLY SETTLED WITH 13.25% IN MAY, 2005 ALSO GOES TO SHOW THAT THE PROVISION MADE BY THE ASSESSEE FOR SUCH REVISION AT 13% IN THE YEAR UNDER CONSIDERATION WAS A LIABILITY, WHICH COULD BE ASCERTAINED WITH REASONABLE CERTAINTY. 19. IN SUPPORT OF THE REVENUES CASE ON THIS ISSUE, THE LD. D.R. HAS RELIED ON THE DECISION OF THE HYDERABAD BE NCH OF THIS TRIBUNAL IN THE CASE OF ANDHRA PRADESH GRAMIN VIKAS BANK. IT IS, HOWEVER, OBSERVED THAT THE SAME IS DISTINGUISHA BLE ON FACTS, INASMUCH AS, THE LIABILITY ON ACCOUNT OF SAL ARY ARREARS IN THE SAID CASE HAD ARISEN AS A RESULT OF PROCEEDI NGS HELD ON 24.07.2010, I.E. MUCH LATER THAN THE CLOSURE OF THE RELEVANT YEAR UNDER CONSIDERATION AND THIS BEING THE UNDISPU TED POSITION, THE TRIBUNAL HELD THAT THE SAID LIABILITY HAVING NEITHER ARISEN NOR DISCHARGED DURING THE RELEVANT Y EAR WAS NOT ALLOWABLE AS DEDUCTION. 20. IN THE CASE OF IBP COMPANY LIMITED (SUPRA), THE FACT SITUATION INVOLVED, ON THE OTHER HAND, WAS SIMILAR TO THE CASE OF THE ASSESSEE INASMUCH AS, THE PAY SCALE AND OTHE R BENEFITS OF THE OFFICERS WERE DUE FOR REVISION W.E.F. 1 ST AUGUST, 1997 AND THE EXERCISE TO REVISE THE SAME WAS ALREADY IN PROGRESS. THE BASIS OF SUCH REVISION WAS ULTIMATELY ACCEPTED BY THE GOVERNMENT AND IT WAS ON THIS BASIS THAT THE ASSESS EE- COMPANY HAD WORKED OUT THE LIABILITY IN RESPECT OF THE SAME. IN THESE FACTS AND CIRCUMSTANCES, IT WAS HELD BY TH E COORDINATE BENCH OF THIS TRIBUNAL THAT THE PROVISIO N FOR INCREASE IN SALARIES AND WAGES MADE BY THE ASSESSEE ON THE BASIS OF BUREAU OF PUBLIC ENTERPRISE GUIDELINES IN ASSESSMENT YEAR 1989-90 WAS NOT FOR CONTINGENT LIABILITY AND T HE REASONABLE PROVISION FOR SUCH LIABILITY WAS REQUIRE D TO BE TAKEN INTO ACCOUNT FOR ARRIVING AT THE COMMERCIAL P ROFIT. IN ARRIVING AT THIS CONCLUSION, THE TRIBUNAL RELIED ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF BHARAT EARTH MOVERS LIMITED VS.- CIT REPORTED IN 245 ITR 428, W HEREIN IT WAS HELD BY THE HONBLE APEX COURT THAT IF A BUSINE SS LIABILITY HAS DEFINITELY ARISEN IN THE ACCOUNTING YEAR, THE D EDUCTION SHOULD BE ALLOWED, ALTHOUGH THE LIABILITY MAY HAVE TO BE QUANTIFIED AND DISCHARGED AT A FUTURE DATE. IT WAS HELD THAT WHAT SHOULD BE CERTAIN IS THE INCURRING OF THE LIAB ILITY WHICH SHOULD BE CAPABLE OF BEING ESTIMATED WITH REASONABL E CERTAINTY THOUGH THE ACTUAL QUANTIFICATION MAY NOT BE POSSIBLE. IT WAS HELD THAT IF THESE REQUIREMENTS AR E SATISFIED, THE LIABILITY IS NOT A CONTINGENT ONE BUT IT IS A L IABILITY IN ITA NO. 730/KOL/15 ALLAHABAD BANK 9 PRESENTI. IN OUR OPINION, THE RATIO OF THESE JUDICI AL PRONOUNCEMENTS IS CLEARLY APPLICABLE TO THE FACTS O F THE PRESENT CASE AND RESPECTFULLY FOLLOWING THE SAME, W E UPHOLD THE IMPUGNED ORDER OF THE LD. CIT(APPEALS) ALLOWING THE CLAIM OF THE ASSESSEE FOR DEDUCTION ON ACCOUNT OF PROVISI ON FOR SALARY ARREARS. GROUNDS NO. 1 & 2 OF THE REVENUES APPEAL ARE ACCORDINGLY DISMISSED. 10. THE CO-ORDINATE BENCH ABOVE, WHILE GIVING RELIE F TO THE ASSESSEE CONSIDERED THE FINAL AGREEMENT FOR REVISIO N OF WAGES SAID TO HAVE ENTERED BETWEEN INDIAN BANKS ASSOCIATI ON AND EMPLOYEES UNION AND HELD A PROVISION IS MAINTAINAB LE WITH REASONABLE CERTAINTY. THE COORDINATE BENCH ALSO, BY RELYING ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CA SE OF BHARAT EARTH MOVERS LIMITED VS.- CIT REPORTED IN 245 ITR 428, WHEREIN IT WAS HELD BY THE HONBLE APEX COURT THAT IF A BUSINESS LIABILITY HAS DEFINITELY ARISEN IN THE ACC OUNTING YEAR, THE DEDUCTION SHOULD BE ALLOWED, ALTHOUGH THE LIABI LITY MAY HAVE TO BE QUANTIFIED AND DISCHARGED AT A FUTURE DA TE AND HELD THAT WHAT SHOULD BE CERTAIN IS THE INCURRING OF THE LIABILITY WHICH SHOULD BE CAPABLE OF BEING ESTIMATED WITH REA SONABLE CERTAINTY THOUGH THE ACTUAL QUANTIFICATION MAY NOT BE POSSIBLE, THEREBY THE CO-ORDINATE BENCH HELD THAT THE ASSESSE E IS ENTITLED TO CLAIM THE DEDUCTION AGAINST A PROVISION MADE FOR SUCH WAGE REVISION. 11. IN THE LIGHT OF THE ABOVE DECISION WHICH DREW S UPPORT FROM THE DECISION OF HONBLE SUPREME COURT IN THE CASE O F BHARAT EARTH MOVERS LIMITED VS.- CIT, WE ARE OF THE VIEW, THAT THE ASSESSEE IS ENTITLED TO CLAIM DEDUCTION OF PROVISIO N OF RS.122,00,00,000/- IN THE YEAR UNDER CONSIDERATION, BUT, HOWEVER, TAKING INTO CONSIDERATION, THE DOCUMENTS A S FILED BY THE ASSESSEE IN THE PROCEEDINGS U/S. 263 WHEREIN TH E SAID DOCUMENTS CAME UP FOR SCRUTINY FOR THE FIRST TIME A ND IT IS ALSO ITA NO. 730/KOL/15 ALLAHABAD BANK 10 NOTICED, AS RIGHTLY POINTED OUT BY THE PRL.CIT THAT NOTHING WAS EXAMINED BY THE AO ON SUCH PROVISION FROM THE ASSES SMENT ORDER, IN VIEW OF THE SAME, WE REMAND THE CASE TO T HE FILE OF AO FOR FRESH CONSIDERATION KEEPING IN VIEW OF THE D OCUMENTS I.E COPY OF EXTRACT OF 9 TH BIPARTITE SETTLEMENT DT:27-04-2010 AND COPIES OF VOUCHERS ISSUED BY THE BANK SHOWING PAYME NT OF WAGES AND TO PASS SUCH ORDER AS INDICATED ABOVE, TH EREFORE, THE ORDER OF PRL.CIT IS JUSTIFIED AND GROUNDS RAISE D BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 12. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH OCTOBER,2016. SD/- SD/- WASEEM AHMEED S.S.VISWANETH RA RAVI ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 19 /10/2016 1. THE APPELLANT/ASSESSEE : ALLAHABAD BANK 2 N.S ROAD , KOLKATA-1. 2 . THE RESPONDENT/DEPARTMENT: THE PRINCIPAL COMMISSIO NER OF INCOME TAX, AAYKAR BHAWAN, 3 RD FLOOR, P-7 CHOWRINGHEE SQUARE, KOLKATA-69. 3. CIT 4. CIT(A) 5. THE DEPARTMENTAL REPRESENTATIVE 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGIS TRAR ** PRADIP SPS INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCHES, KOLKATA COPY OF THE ORDER FORWARDED TO:-