DCIT, Sikar V. SIKAR KENDRIYA SAHKARI BANK LTD., Sikar

ITA 77/JPR/2011

• Counselvise Citation: 7723114 RSA 2011
• Duration Of Justice: 7 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-09-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 01-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D K MEENA

Judgement Text

1 ITA 77-11 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH A JAIPUR. ( BEFORE SHRI R.K. GUPTA AND SHRI N.L. KALRA ) ITA NO. 77/JP/2011 ASSTT. YEAR : 2007-08. THE DCIT, CIRCLE, VS. SIKAR KENDRIYA SAHAKARI BA NK LTD., SIKAR. VASANT VIHAR, SIKAR. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI D.K. MEENA RESPONDENT BY : NONE (A/D ON RECORD) DATE OF HEARING : 04.8.2011 DATE OF PRONOUNCEMENT : 09.9.2011 ORDER DATED : 09/09/2011. PER R.K. GUPTA, J.M. THE DEPARTMENT IS IN APPEAL AGAINST THE ORDER OF L D. CIT (A) RELATING TO ASSESSMENT YEAR 2007-08. 2. THE DEPARTMENT IS OBJECTING IN SUSTAINING ADDITI ON OF RS. 1,12,433/- AS AGAINST ADDITION MADE BY AO AT RS. 15,35,628/- IN RESPECT T O PROVISION FOR CONTINGENT LIABILITY ON ACCOUNT OF EARNED LEAVE. 3. DURING THE ASSESSMENT PROCEEDINGS, THE AO NOTICE D THAT THE ASSESSEE HAS DEBITED A SUM OF RS. 15,35,628/- TO PROFIT & LOSS A/C ON ACCO UNT OF THE PROVISION FOR EXPENDITURE IN RESPECT OF THE PRIVILEGE LEAVE (PL) EARNED BY THE E MPLOYEES AND SOME CONTINGENT EXPENDITURE. DETAILS OF EXPENDITURE SHOWN AS PROVI SIONS WERE FILED. RELIANCE WAS PLACED ON THE DECISION OF BHARAT EARTH MOVERS (SC). HOWEVE R, THE AO REJECTED THE CLAIM OF THE ASSESSEE BY OBSERVING THAT THE DECISION OF HONBLE SUPREME COURT IN WHICH IT HAS BEEN 2 ALSO HELD THAT WHEN THE LIABILITY IS DISCHARGED THE N THE PROVISION MADE EARLIER IS TO BE DEBITED TO AVOID DOUBLE DEDUCTION. IN THIS REGARD THE AO NOTED THAT ASSESSEE HAS MADE PROVISION EQUAL TO ONE MONTHS SALARY FOR ALL ITS E MPLOYEES, IRRESPECTIVE OF WHETHER ANY LEAVE HAD BEEN AVAILED BY ANY EMPLOYEE OR NOT AND W HETHER AN EMPLOYEE HAD ANY ACCUMULATIVE LEAVE OR NOT AND ALSO WHETHER AN EMPLO YEE HAD BEEN ALREADY PAID ANY LEAVE ENCASHMENT BENEFIT OR NOT. ACCORDINGLY THE CLAIM O F ASSESSEE WAS REJECTED. 4. IT WAS SUBMITTED BEFORE LD. CIT (A) THAT ASSESSE E HAD MADE A PROVISION FOR 30 DAYS PRIVILEGE LEAVE, EARNED BY ALL THE EMPLOYEES D URING THE YEAR, WHICH WAS A STATUTORY OBLIGATION OF THE ASSESSEE AND WHICH WAS ALLOWED TO BE DONE ON ACCRUAL BASIS AS PER RULING OF THE APEX COURT IN THE CASE OF BHARAT EART H MOVERS LTD. IT WAS ALSO SUBMITTED THAT ASSESSEE HAS FURNISHED EMPLOYEE WISE DETAILS F OR THE SAME BEFORE AO AND HENCE WAS NOT JUSTIFIED IN MAKING THE IMPUGNED DISALLOWANCE. IN SUPPORT, COPIES OF SAID DETAILS WERE FILED BEFORE LD. CIT (A) ALSO. THE LD. CIT (A ) AFTER CONSIDERING THE SUBMISSIONS FOUND THAT THE ASSESSEE DESERVES TO SUCCEED IN PART AND ACCORDINGLY THE ADDITION OF RS. 14,23,195/- WAS DELETED OUT OF TOTAL ADDITION MADE. 5. THE LD. D/R HAS PLACED RELIANCE ON THE ORDER OF AO. 6. NONE APPEARED ON BEHALF OF THE ASSESSEE. THE AP PEAL IS BEING DISPOSED OFF AFTER TAKING INTO CONSIDERATION THE ORDERS OF AO AND LD. CIT (A). 7. AFTER CONSIDERING THE ORDERS OF THE AO AND LD. C IT (A), WE FIND NO INFIRMITY IN THE FINDING OF LD. CIT (A). THE LD. CIT (A) HAS EX AMINED THE ISSUE IN DETAIL AND THEN ONLY HELD THAT THE ASSESSEE DESERVES TO SUCCEED IN PART. FINDINGS OF LD. CIT (A) HAVE BEEN RECORDED IN PARA 4.3 AT PAGES 6 & 7 ARE AS UNDER :- 3 4.3. I HAVE CAREFULLY CONSIDERED THE FACTS OF TH E CASE AND SUBMISSIONS OF LD. AR. ON PERUSAL OF THE RELEVANT RECORD, I FIND THAT THE APPELLANT HAD CLAIMED AN AMOUNT OF RS. 15, 35,628/- IN THE P&L ACCOUNT UNDER THE HEAD COMPENSATION TO EMPLOYEE S. IN THIS REGARD, IT IS NOTICED THAT THE SAID AMOUNT COMPRISE D OF CONTINGENT EXPENDITURE OF RS. 38,616/- AND PROVISION FOR EXPEN DITURE, IN RESPECT OF THE ENCASHMENT OF PRIVILEGE LEAVE (PL) O F THE EMPLOYEES, AMOUNTING TO RS. 14,97,012/-. DURING THE APPELLATE PROCEEDINGS, LD. AR HAS PROVIDED THE DETAILS OF THE AFORESAID PROVISION OF RS. 14,97,012/-, BY PROVIDING THE NAME S OF THE EMPLOYEES, THEIR MONTHLY SALARY (BASIC+DA) AND THE ACCUMULATED BALANCE OF PL IN THE ACCOUNT OF EACH EMPLOYEE, WHIC H WERE ALSO PRODUCED BEFORE THE AO DURING THE ASSESSMENT PROCEE DINGS. ON PERUSAL OF THE SAME, IT IS SEEN THAT OUT OF THE TOT AL 104 EMPLOYEES, THERE WAS NO CREDIT OF PL IN THE ACCOUNTS OF 3 EMPL OYEES AND THERE WAS A CREDIT OF LESS THAN 30 DAYS IN THE ACCOUNTS O F 2 OTHER EMPLOYEES. FURTHER, IT IS FOUND THAT THE ACCUMULAT ED BALANCE OF PL IN RESPECT OF ALL THE OTHER EMPLOYEES WAS BETWEEN 6 0 AND 300 PL. THEREFORE, ON THESE FACTS, I FIND THAT THE APPELLAN T WAS ENTITLED TO DEDUCTION FOR THE PROVISION MADE, DURING THIS YEAR, IN RESPECT OF THOSE 99 EMPLOYEES (104 5), WHICH AMOUNTED TO RS. 14,64,205/- (RS. 14,97,012 - $W. 32,807). HOWEVER, I ALSO FIND THAT THE APPELLANT HAS CLAIMED AN EXPENDITURE OF RS. 41,010/ - ON ACCOUNT OF LEAVE SALARY, SEPARATELY IN THE P& L ACCOUNT, WHICH HAS NOT BEEN DEBITED IN THE AFORESAID PROVISION ACCOUNT. THEREFO RE, THE AFORESAID ALLOWABLE DEDUCTION OF RS. 14,64,205/- WOULD BE RED UCED BY THE SAID AMOUNT OF RS. 41,010-, WHICH HAS ALREADY BEEN CLAIMED BY THE ASSESSEE IN THE P&L ACCOUNT. FURTHER, IT IS OBSERV ED THAT THE APPELLANT HAS NOT GIVEN ANY DETAILS / EXPLANATION I N RESPECT OF THE AFOREMENTIONED OTHER AMOUNT OF RS. 38,616/- CLAIMED AS CONTINGENT EXPENDITURE. HENCE, THE SAID CLAIM, BEI NG ONLY A 4 CONTINGENT LIABILITY, IS FOUND TO BE NOT ALLOWABLE. IN ACCORDANCE WITH THE ABOVE DISCUSSION, THE IMPUGNED DISALLOWANC E IS SUSTAINED TO THE EXTENT OF RS. 1,12,433/- (RS. 32,807 + RS. 4 1,010 + RS. 38,61) AND THE BALANCE AMOUNT OF RS. 14,23,195/- (R S.15,35,628 RS. 1,12,433) IS DIRECTED TO BE DELETED. CONSEQUENT LY, THIS GROUND OF APPEAL IS TREATED AS PARTLY ALLOWED. THESE FINDINGS NEITHER COULD BE CONTROVERTED NOR AN Y OTHER MATERIAL BROUGHT ON RECORD TO ESTABLISH OTHERWISE. THEREFORE, WE SEE NO REASON T O INTERFERE WITH THE FINDING OF LD. CIT (A). THEREFORE, THE SAME ARE CONFIRMED. 8. IN THE RESULT, APPEAL OF THE DEPARTMENT IS DISMI SSED. 9. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 09. 9.2011. SD/- SD/- ( N.L. KALRA ) ( R.K. GUPTA ) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR, D/ COPY FORWARDED TO :- THE DCIT, CIRCLE SIKAR. SIKAR KENDRIYA SAHKARI BANK LTD., SIKAR. THE CIT (A) THE CIT THE D/R GUARD FILE (ITA NO. 77/JP/2011) BY ORDER, AR ITAT JAIPUR.