2019 (4) TMI 274 - AT - Income Tax

Entitlement to raise additional grounds of appeal before the appellate authority - Allowable deduction u/s 43B(f) - provision made for leave salary made by the appellant based on actuarial valuation - whether provisions of section 43B(f) is unconstitutional? - HELD THAT - We have noted that the Assessing Officer not accepted the revised claim of the assessee. The ld. CIT(A) also concurred with the decision of Assessing Officer. However, keeping in view the ratio of law laid down in CIT vs. Pruthvi Brokers and Shareholders 2012 (7) TMI 158 - BOMBAY HIGH COURT we admit the additional ground of claim raised by assessee and restore the issue to the file of Assessing Officer to decide the issue as per the decision of coordinate bench in Everest Industries Ltd. vs. JCIT (2018 (4) TMI 426 - ITAT MUMBAI). The grounds of appeal is restored to the file of AO in case the decision of Hon ble Supreme Court comes in favour of the assessee in future, then the assessee is free to seek amendment of assessment order. - Appeal of the assessee is allowed for statistical purpose

Summary

Issues:
Appeal against disallowance of leave salary provision under section 43B(f) of the Income Tax Act for Assessment Year 2010-11.

Detailed Analysis:
1. Facts and Background: The assessee, engaged in media services, filed its return for AY 2010-11, declaring income of ?64,49,47,710. The revised return included a provision for leave encashment of ?49,81,018. The AO disallowed this claim under section 43B(f) of the Act, which was upheld by the CIT(A).

2. Legal Arguments: The assessee contended that based on the decision in Exide Industries Ltd. vs. Union of India, the provision for leave encashment should not be disallowed. The AR cited the decision in Everest Industries Ltd. vs. JCIT, stating that if the Supreme Court rules in favor of the assessee, an amendment to the assessment order can be sought.

3. Judicial Analysis: The ITAT considered the precedent set by the jurisdictional High Court in CIT vs. Pruthvi Brokers & Shareholders, allowing additional grounds of appeal. Referring to the decision in Everest Industries Ltd., the ITAT admitted the additional claim and remanded the issue to the AO for reconsideration based on the pending Supreme Court decision.

4. Precedents and Court Observations: The ITAT referenced the Cochin Bench's approach in a similar matter, emphasizing the need to await the Supreme Court's decision on the constitutionality of section 43B(f). The ITAT highlighted the stay granted by the Supreme Court on the Calcutta High Court's decision in Exide Industries Ltd., indicating that the assessee could seek an amendment if the Supreme Court rules favorably in the future.

5. Final Decision: The ITAT allowed the appeal for statistical purposes, restoring the issue to the AO pending the outcome of the Supreme Court's decision. The ITAT emphasized that if the Supreme Court rules in favor of the assessee, an amendment to the assessment order can be pursued.

This detailed analysis outlines the legal arguments, court observations, and the final decision regarding the disallowance of the leave salary provision under section 43B(f) of the Income Tax Act for the relevant assessment year.