Gillanders Arbuthnot & Co. Ltd., Kolkata V. DCIT, C ircle- 4, Kolkata, Kolkata

ITA 938/KOL/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 83039 (ITAT-KOLKATA)
• Duration Of Justice: 4 year(s) 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2014
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 12-08-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 07-05-2010
• Court: TRIBUNAL
• Department Lawyers: MADHU MALATI GHOSH
• Assessee Lawyers: S M SURANA
• Keywords: Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH B , KOLKATA [BEFORE HONBLE SRI SHAMIM YAHYA, AM & HONBLE SR I GEORGE MATHAN, JM] ITA NOS.938 & 939/KOL/2010 ASSESSMENT YEARS : 2005-06 & 2006-07 ( APPELLANT ) (RESPONDENT) GILLANDERS ARBUTHNOT & CO.LTD. `.-VS- D.C.I.T., C IRCLE-4, KOLKATA KOLKATA (PAN:AAACG 9832 F) FOR THE APPELLANT SHRI S.M.SURANA, ADVOCATE FOR THE RESPONDENT SMT. MADHU MALATI GHOSH, JCIT, SR.DR DATE OF HEARING : 12.08.2014 DATE OF PRONOUNCEMENT : 12. 08.2014. ORDER PER SHRI SHAMIM YAHYA, AM THESE APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST ORDER OF LD. C.I.T.(A)- CENTRAL-II, KOLKATA DT. 19.01.2010 AND PERTAIN TO A SSESSMENT YEARS 2005-06 AND 2006- 07 RESPECTIVELY. 2. THE COMMON ISSUE RAISED BY THE ASSESSEE IN BOTH THE APPEALS READ AS UNDER :- 1. (A) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND THE LAW APPLICABLE TO IT THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) WAS NOT JUSTIFIED IN CONFIRMING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER IN REGAR D TO THE APPELLANTS CLAIM OF PROVISION FOR LEAVE ENCASHMENT AMOUNTING RS.15,71,4 43/- (RS.16,84,218/- FOR A.YR.2006-07). 2. THAT THE APPELLANT SUBMIT THAT THE SAID PROVISIO N SHOULD NOT BE DISALLOWED U/S 43B(F) OF THE INCOME TAX ACT. 3. IN THIS CASE THE ASSESSEES CLAIM OF PROVISION FOR LEAVE ENCASHMENT WAS DISALLOWED BY AO U/S 43B(F) OF THE ACT. BEFORE THE LD. CIT(A) IT WAS SUBMITTED THAT THE IMPUGNED AMOUNT SHOULD NOT DISALLOWED IN VIEW O F JUDGEMENT OF HONBLE CALCUTTA HIGH COURT IN THE CASE OF EXIDE INDUSTRIES 212 CTR 206. THE LD. CIT(A) NOTED THAT ITA.NOS.938&939/KOL/2010 GILLANDERS ARBUTHNOT & CO.LTD. A.YRS.2005-06 & 2006-07 2 THE HONBLE APEX COURT HAS STAYED THE ORDER OF THE HONBLE CALCUTTA HIGH COURT. IN VIEW OF THE MATTER THE LD. CIT(A) HELD THAT A.O. WA S RIGHT IN NOT ACCEPTING THE ASSESSEES PETITION FOR ALLOWING THE PROVISION TOWA RDS LEAVE ENCASHMENT. AGAINST THE ABOVE ORDER THE ASSESSEE IS IN APPEAL B EFORE US. 4. WE HAVE HEARD BOTH THE COUNSEL AND CAREFULLY PER USED THE RECORDS. THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT THE MATTER M AY BE REMITTED TO THE FILE OF AO AND AO MAY DECIDE THIS ISSUE AS PER LAW IN THE LIGH T OF THE DECISION OF HONBLE APEX COURT. IN THIS REGARD WE REFER TO THE DECISION OF I TAT IN THE CASE OF M/S.MAGMA FINCORP. LTD. VS DCIT IN ITA NO.1120/KOL/2011 ORDER DATED 12.04.2013.THE LD. DR DID NOT HAVE ANY SERIOUS OBJECTION TO THE PROPOSITI ON OF SENDING THE MATTER BACK TO THE FILE OF AO FOR CONSIDERATION AFRESH. 4.1. UPON HEARING BOTH THE COUNSEL WE FIND THAT IN THE DECISION OF ITAT CITED ABOVE THE TRIBUNAL HAS HELD AS UNDER :- 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AT LENGTH A ND CAREFULLY PERUSED THE MATERIALS AVAILABLE ON RECORD. THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ISSUE BEFORE THE HONBLE APEX COURT WAS CLAIMED AS HOLDING THE PROVISION OF SECTION 43B(F) OF THE ACT WAS UNCONSTITUTIONAL WAS STAYED, IN SO FAR AS THE EFFECTS OF THE ASSESSEES CASE ARE IN ACCORDANCE WITH THE EMPLOYME NT POLICIES OF THE ASSESSEE UNDERTAKING, IN SO FAR AS IT WAS NOT TO BE CONSIDER ED AS STATUTORY PAYMENT FOR DISALLOWANCE U/S 43B(F) OF THE ACT, IN SO FAR AS, T HE PROVISION HAS NOT BEEN MADE AS SUM PAYABLE BY THE ASSESEE AS AN EMPLOYER IN LIEU OF TH E LEAVE ENCASHMENT TO BE LYING TO THE CREDIT OF THE EMPLOYEE. THE LD. COUNSEL FOR THE AS SESSEE SUBMITTED THE AMOUNT CANNOT BE DETERMINED AS NOTED BY THE AUTHORITIES BELOW IN SO FAR AS THE CLAIM WAS TO BE PROVIDED FOR UNDER THE MERCANTILE SYSTEM OF ACCOUNTING WHICH SYSTEM IS BEING CONSISTENTLY FOLLOWED THAT THE EMPLOYEES WHO ARE ON ROLL HAVE TO BE PAID AS AND WHEN THE LEAVE IS ENCASHED. SHE SUBMITTED THAT IT WAS NOT AN ACCUMULA TION OF LEAVE IN THE IMPUGNED ASSESSMENT YEAR AS WAS PROVIDED FOR ON IDENTIFYING THE EMPLOYEES. THEREFORE, IN VIEW OF THE HONBLE CALCUTTA HIGH COURT DECISION HAVING BEE N STAYED AND THE HONBLE SUPREME COURT HAVING STAYED THE OPERATION OF THE SAID JUDGE MENT VIS-A-VIS THEIR OWN DECISION ON THE ISSUE HAVING BEEN SUPERCEDED VIZ. BHARAT EARTH MOVERS VS CIT 245 ITR 428, ALLOWING EXPENSES ON ACCRUAL BASIS, THE LD. COUNSEL FOR THE ASSESSEE PRAYED FOR RESTORATION TO THE FILE OF THE AO FOR CONSIDERING T HE ISSUE IN THE LIGHT OF THE PROVISIONS GOVERNING THE DEDUCTION TO BE ALLOWED ON ACTUAL PAY MENT ONLY AS PROMULGATED W.E.F. 1 ST APRIL, 2002 IN THE CASE OF THE ASSESSEE. THE ASSESS EE HAD CLAIMED PAYMENTS EVEN AFTER THE CLOSURE OF THE FINANCIAL YEAR INDICATES THAT TH E PAYMENTS HAD TO BE VERIFIED IN ACCORDANCE WITH THE PROVISION OF LAW AND NOT BECAUS E EMPLOYEES CREDIT HAD BEEN UTILIZED BY THE ASSESSEE UNDER THE PROVISION OF SEC TION 2(24) OF THE ACT WHICH ENVISAGE IT ITA.NOS.938&939/KOL/2010 GILLANDERS ARBUTHNOT & CO.LTD. A.YRS.2005-06 & 2006-07 3 AS A STATUTORY LIABILITY WAS THE ISSUE STAYED BY TH E HONBLE SUPREME COURT ON THE DICTUM OF THE HONBLE CALCUTTA HIGH COURT. THE REVENUE HAD NO OBJECTION IF THE MATTER WAS RESTORED TO THE FILE OF AO FOR CONSIDERATION AFRESH . IN THIS VIEW OF THE MATTER WE DIRECT THE AO TO VERIFY THE CLAIM IN ACCORDANCE WITH THE P ROVISION OF THE INCOME TAX ACT AFRESH IN LINE WITH THE DECISION OF THE HONBLE SUPREME CO URT IN THE CASE OF BHARAT EARTH MOVERS LTD. VS CIT (SUPRA). NEEDLESS TO SAY, THE AS SESSEE BE AFFORDED ADEQUATE OPPORTUNITY OF BEING HEARD TO SUBSTANTIATE ITS CLAI M. 4.2. AS IN AN IDENTICAL ISSUE THE MATTER WAS REMITT ED TO THE FILE OF AO AND THE REVENUE HAS NOT SERIOUSLY OBJECTED TO THIS. WE ALSO FOLLOWING THE PRECEDENT SET ASIDE THE ISSUE TO THE FILE OF AO. AO SHALL CONSIDER THE ISSUE IN THE LIGHT OF THE DIRECTIONS CITED ABOVE. 5. IN THE RESULT THESE APPEALS FILED BY THE ASSESSE E ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 12.08.2014. SD/- SD/- [ GEORGE MATHAN ] [SHAMIM YAHYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 12.08.2014. R.G.(.P.S.) COPY OF THE ORDER FORWARDED TO: 1. GILLANDERS ARBUTHNOT & CO.LTD., C-4, GILANDER HOUSE , NETAJI SUBHAS ROAD, KOLKATA- 700001. 2 D.C.I.T., CIRCLE-4, KOLKATA. 3 . CIT(A)-CENTRAL-II, KOLKATA 4. CIT KOLKATA 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY, BY ORDER, ASST. REGISTRAR , ITAT, KOLKATA BENCHES ITA.NOS.938&939/KOL/2010 GILLANDERS ARBUTHNOT & CO.LTD. A.YRS.2005-06 & 2006-07 4