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2012 (8) TMI 910 - AT - Income TaxDisallowance of provision for encashment of leave - Held that - Tribunal allowed the claim of provision for leave encashment on the basis of decision of Hon ble apex Court in the case of Bharat Earth Movers (2000 (8) TMI 4 - SUPREME Court ) as the Hon ble Calcutta High Court in the case of Exide Industries (2007 (6) TMI 175 - CALCUTTA High Court ) struck down the provision of section 43B(f) being arbitrary, unconscionable. Further, the department filed SLP before Hon ble apex Court against the decision of Hon ble Calcutta High Court in the case of Exide Industries Ltd (2008 (9) TMI 921 - SUPREME COURT) by its order has stayed the operation of judgment of Hon ble Calcutta High Court. At the time of hearing, ld A.R. submitted that the said appeal is yet to be disposed of. In view of above and respectfully following the earlier decisions (supra), we set aside the orders of authorities below and restore the matter back to the file of AO for adjudication afresh as per the decision of Hon ble apex Court in the case of Exide Industries Ltd (supra). - Decided in favor of assessee for statistical purposes.
Issues:
Disallowance of provision for encashment of leave under Section 43B and conflicting judicial decisions. Analysis: The appeal was filed against the disallowance of a provision for encashment of leave amounting to Rs. 77,34,656 by the assessee for the assessment year 2008-09. The Assessing Officer contended that the provision was not allowable as the payment was not made by the assessee. The assessee claimed deduction based on the striking down of clause (f) of Section 43B by the Hon'ble Calcutta High Court in a specific case. The Assessing Officer rejected the claim, citing that the department had challenged the Calcutta High Court decision, making the matter sub judice. The CIT (A) upheld the AO's decision, leading to the appeal before the Tribunal. During the proceedings, the assessee's representative highlighted a similar issue addressed by the Tribunal in a previous case where the provision for leave encashment was allowed based on the decision of the Hon'ble apex Court. The department had appealed against this decision before the Hon'ble Bombay High Court, which was pending. Additionally, the Supreme Court had stayed the Calcutta High Court's judgment on the matter. The Tribunal considered various precedents and decided to set aside the lower authorities' orders, directing the matter to be reconsidered by the Assessing Officer in light of the apex Court's decision in the specific case. The Tribunal observed that the Mumbai Tribunal and Kolkata Bench had previously dealt with similar issues and had set aside orders, directing the matter to be reconsidered based on relevant judicial decisions. Considering the conflicting judgments and the pending appeals, the Tribunal allowed the assessee's appeal for statistical purposes, restoring the matter to the Assessing Officer for fresh adjudication in accordance with the apex Court's decision in the specific case. In conclusion, the Tribunal's decision was based on the conflicting interpretations of Section 43B and the varying judicial precedents. The matter was remanded to the Assessing Officer for reconsideration in light of the apex Court's decision, ensuring consistency and adherence to legal principles.
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