2002 (2) TMI 100 - HC - Income Tax

Summary

Issues Involved:
The judgment involves the following issues:
1. Claim of weighted deduction under section 35B of the Income-tax Act, 1961 for the assessment year 1976-77.
2. Allowance of deduction on account of payment of wages/salary in lieu of leave to employees.

Weighted Deduction under Section 35B:
The assessee, an exporter, claimed weighted deduction under section 35B for the assessment year 1976-77. The Tribunal accepted the claim based on the decision in J. Nam Chandi and Co. case. The Revenue challenged this before the High Court, questioning the allowance of various expenditures including commission/service charges, E.C.G.C. charges, premium, subscription to Hosiery Export Corporation, and other expenses. The High Court remitted the matter to the Tribunal for further consideration in light of relevant Supreme Court decisions.

Payment of Wages/Salary in Lieu of Leave:
The Tribunal allowed the assessee's claim for leave with wages, despite it being a contingent liability. The assessee argued that regular payments were made to employees for unavailed leave, citing precedent and fulfilling conditions under the Factories Act, 1948. The Tribunal, after detailed consideration, accepted the claim noting the consistent provision made by the assessee over the years. The High Court upheld the Tribunal's decision, emphasizing the sustained nature of the claim and its alignment with Supreme Court rulings.

Conclusion:
The High Court remitted the matter regarding weighted deduction under section 35B for further review by the Tribunal. However, the claim for payment of wages/salary in lieu of leave was upheld in favor of the assessee, with the Court ruling against the Revenue. The decision was based on the consistent provision and allowance of such deductions over multiple assessment years, in line with legal requirements and previous judicial interpretations.