Metro Dairy Ltd, Kolkata V. D.C.I.T Cir - 7,kolkata, Kolkata

ITA 731/KOL/2013

• Counselvise Citation: 73123514 RSA 2013
• Duration Of Justice: 2 year(s) 7 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-12-2015
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 05-04-2013
• Court: TRIBUNAL
• Department Lawyers: RANU BISWAS JCIT LD
• Section: 143(3)

Judgement Text

ITA NO.731/KOL/2013-C-AM M/S. METRO DAIRY LTD 1 IN THE INCOME TAX APPELLATE TRIBUNAL, C BENCH, K OLKATA BEFORE : SHRI MAHAVIR SINGH,JUDICIAL MEMBER, AND SHRI M. BALAGANESH, ACCOUNTANT MEMBER ITA NO. 731/KOL/2013 A.Y 2009-10 M/S. METRO DAIRY LTD VS. D.C.I.T, CIRCLE-7, KOL KATA PAN: AABCM 8352K PAN: AACCM 0 685L (APPELLANT) (RESPONDENT) FOR THE APPELLANT: NONE APPEARED FOR THE RESPONDENT : SMT. RANU BISWAS, JCIT, LD.DR DATE OF HEARING: 27-11 -2015 DATE OF PRONOUNCEMENT: 4 -12-20 15 ORDER SHRI M.BALAGANESH, AM : THIS APPEAL OF THE ASSESSEE ARISES OUT OF THE ORDE R PASSED BY THE LEARNED CIT(A), VIII, KOLKATA IN APPEAL NO. 230/CIT(A)-VIII /KOL/11-12 FOR THE ASST YEAR 2009-10 DATED 19-12-2012 AGAINST THE ORDER OF ASSE SSMENT PASSED BY THE LEARNED AO U/S. 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTE R REFERRED TO AS THE ACT). 2. THE ONLY ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER IN THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE PROVISION MADE FO R LEAVE ENCASHMENT AMOUNTING TO RS. 25,38,600/- COULD BE ALLOWED AS A DEDUCTION PEN DING FINAL DISPOSAL OF THE APPEAL IN THE CASE OF EXIDE INDUSTRIES LTD BY THE HONBLE APE X COURT. 3. THE BRIEF FACTS OF THIS ISSUE IS THAT THE ASSES SEE IS A DOMESTIC COMPANY INTER ALIA ENGAGED IN THE PROCESSING / MANUFACTURING AND SALE OF MILK AND MILK PRODUCTS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE LEARNED A O OBSERVED THAT THE ASSESSEE MADE PROVISION FOR LEAVE ENCASHMENT AGGREGATING TO RS. 25,38,600/- AND CLAIMED THE ITA NO.731/KOL/2013-C-AM M/S. METRO DAIRY LTD 2 SAME AS DEDUCTION. THIS PROVISION WAS ADMITTEDLY M ADE ON THE BASIS OF AN ACTUARIAL VALUATION OFN PROJECTED UNIT REDIT METHOD MADE AT THE END OF THE RELEVANT FINANCIAL YEAR. THE SAID LIABILITY IS REQUIRED TO BE DISCHAR GED BY THE ASSESSEE AS LEAVE ENCASHMENT AT THE TIME OF RETIREMENT OF THE CONCERN ED EMPOYEES. THE ASSESSEE CLAIMED THE SAME AS DEDUCTION BY PLACING RELIANCE O N THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF BHARAT EARTH MOVERS LTD R EPORTED IN 245 ITR 428 (SC). THE LEARNED AO DISALLOWED THE SAME IN TERMS OF SE CTION 43B(F) OF THE ACT AS THE SAME IS ALLOWABLE AS DEDUCTION ONLY ON PAYMENT. ON FIRST APPEAL, THE LEARNED CITA UPHELD THE ACTION OF THE LEARNED AO. 4. WHEN THE CASE WAS CALLED FOR, NONE APPEARED FO R THE ASSESSEE. WE HAVE HEARD THE LEARNED DR. WE FIND THAT THE ISSUE UNDER APPEA L IS CONSIDERED IN THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF EXIDE INDUSTRIES LTD VS UNION OF INDIA REPORTED IN 292 ITR 470 (CAL) . WE FIND THAT IT IS RELEVANT TO GET INTO THE OPER ATIVE PORTION OF THE SAID DECISION OF THE CALCUTTA HIGH C OURT, WHEREIN IT WAS HELD THAT:- 11. IN THIS REGARD THE OBSERVATION OF THE APEX C OURT 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 AL THOUGH THE LIABILITY MAY HAVE TO BE QUANTIFIED AND DISCHARGED AT A FUTURE DATE. W HAT SHOULD BE CERTAIN IS THE INCURRING OF THE LIABILITY. IT SHOULD ALSO BE CAPAB LE OF BEING ESTIMATED WITH REASONABLE CERTAINTY THOUGH THE ACTUAL QUANTIFICATI ON MAY NOT BE POSSIBLE. IF THESE REQUIREMENTS ARE SATISFIED THE LIABILITY IS NOT A C ONTINGENT 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 LIABILIT Y SHALL HAVE TO BE DISCHARGED IS NOT CERTAIN.... APPLYING THE ABOVE SAID SETTLED PRINCIPLES TO THE F ACTS 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 PROPORTIONATE WITH THE ENTITLEMENT EARNED BY EMPLOYEES OF THE COMPANY, INC LUSIVE 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 PROVISION IS MADE FOR THE LIABILITY. THE LIABILITY IS NOT A CONTINGENT LIABILITY. THE HIGH COURT WAS NOT RIGHT IN TAKING T HE VIEW TO THE CONTRARY. ITA NO.731/KOL/2013-C-AM M/S. METRO DAIRY LTD 3 12. *** *** *** *** *** 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). IT IS OBSERVED THAT THE REVENUE HAD PREFERRED SPECI AL LEAVE PETITION (SLP) BEFORE THE HONBLE SUPREME COURT AGAINST THE JUDGEMENT OF HON BLE CALCUTTA HIGH COURT. THE HONBLE APEX COURT IN SLP PROCEEDINGS IN CC 12060 / 2008 DATED 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 HONBLE 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 WHI CH HAS ACCRUED TILL DATE. IT IS MADE CLEAR THAT AS FAR AS THE OUTSTANDING INT EREST DEMAND AS OF DATE IS CONCERNED, IT WOULD BE OPEN TO THE DEPARTMENT TO RE COVER THAT AMOUNT IN CASE CIVIL APPEAL 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. RESPECTFULLY FOLLOWING THE AFORESAID JUDICIAL PRECE DENT RELIED UPON, WE DEEM IT FIT AND APPROPRIATE , IN THE INTEREST OF JUSTICE AND FAIR P LAY, TO SET ASIDE THIS ISSUE TO THE FILE OF THE LEARNED AO TO PASS ORDERS BASED ON THE OUTCOME OF THE MAIN APPEAL ON MERITS BY ITA NO.731/KOL/2013-C-AM M/S. METRO DAIRY LTD 4 THE HONBLE SUPREME COURT AS STATED SUPRA. ACCORDI NGLY, THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR T ALLOWED FOR STATISTICAL PURPOSES ORDER PRONOUNCED ON 4.12.2015 1. . THE APPELLANT: M/S. METRO DAIRY LIMITED 21 GOPAL M UKHERJEE ROAD, KOLKATA-700 002 (WB).. 2 THE RESPONDENT-THE DCIT CIRCLE-7, P-7 CHOWRINGHEE SQ., KOL-69. 3 / THE CIT, 4.THE CIT(A) 5 . DR, KOLKATA BENCH 6 . GUARD FILE . TRUE COPY, BY ORDER, ASSTT REGISTRAR SD/- ( MAHAVIR SINGH, JUDICIAL MEMBER ) SD/- (M. BALAGANESH, ACCOUNTANT MEMBER) DATE 4 /12/2015 **PRADIP/SPS COPY OF THE ORDER FORWARDED TO:-