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Issues:
Admissibility of leave with wages amounting to Rs. 25,186 for the assessment year 1973-74. Analysis: The appeal by the Revenue challenged the order of the CIT (A) regarding the allowance of the assessee's claim for 'leave with wages' amounting to Rs. 25,186. The primary issue revolved around whether this claim was a contingent liability or an accrued liability of the relevant accounting period. The ITO allowed the claim partially based on actual payments made by the assessee but disallowed the balance amount. The assessee argued that there was a contractual obligation with the workers for encashment of leave with wages, supported by certificates from some workers. The CIT (A) sided with the assessee, stating that the claim represented a contractual obligation and accrued liability, hence allowing the full claim of Rs. 25,186. The Department representative contended that the issue was decided against the assessee in a previous year and raised concerns about the lack of certificates from all workers. The assessee's counsel argued that the previous decision did not consider all facts, emphasizing the contractual nature of the obligation supported by provisions of the Factories Act, 1948. The Tribunal rejected the Department's reliance on a previous decision, noting that the issue for the current assessment year was based on an oral agreement between the workers and management, evidenced by certificates submitted. The Tribunal found no merit in the Department's argument regarding missing certificates, as the ITO did not request further evidence. The Tribunal affirmed the CIT (A)'s decision, highlighting the contractual nature of the obligation and the consistent treatment of the claim in subsequent years. In the final analysis, the Tribunal dismissed the appeal, upholding the CIT (A)'s decision to allow the full claim of Rs. 25,186 for leave with wages. The Tribunal emphasized the contractual basis of the obligation, distinguishing it from the application of the Factories Act as considered in a previous year. The consistent treatment of the claim in subsequent assessments further supported the decision to allow the claim in full based on accrued liability and contractual obligation.
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